Dollar bulls rack up quick gains in $UUP

Option traders have made exponential gains in the PowerShares DB U.S. Dollar Bullish Fund (UUP).

On Tuesday, Mar. 12, Market Rebellion’s tracking systems found that 12,500 June $28 calls were bought for $0.39 to $0.43 with shares at $27.06. This was clearly a new position, as open interest in the strike was only 7,005 contracts before the trade occurred.

Those calls traded for $2.16 today, over 5 times their purchase prices. The stock rose 6.61% at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

UUP was last up 2.19% today at $28.04. The exchange-traded fund tracks changes in the U.S. dollar and earlier this session made a new high of $28.89.