Dollar bears double money in $UUP

Option traders have doubled their money in downside option bets on the PowerShares DB U.S. Dollar Bullish Fund (UUP).

On Sep. 26Market Rebellion’s Unusual Activity Service flagged the purchase of 22,900 October $30 puts for $0.24 to $0.26 with shares at $30.60. This was clearly a new position, as open interest in the strike was a just 1,836 contracts before that session began.

Those puts have traded for $0.61 today, over 2 times their purchase prices. The stock declined 3.2% in the same time frame, underscoring how options can far outperform their underlying shares.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

The UUP was last down 1.1% at $29.68 today.

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