Going Long the Dollar
On Wednesday, we recommended buying to open the PowerShares DB US Dollar Index Bullish Fund (NYSE: UUP) December 15, 2017 $25 call option. Our dollar indicator became bullish enough to warrant going long the dollar.
At the same time, we recommended buying to close the CurrencyShares Japanese Yen Trust (NYSE: FXY) July 21, 2017 $90 call. This was strictly a short-term hedge in case market participants flee to safety en masse if the Comey testimony revealed something earth shattering. It was not an indicator-based trade.
Since we have the December 15, 2017 $23 put against the VanEck Gold Miners ETF (NYSE: GDX), a flight to safety would likely have hurt our position, so to be conservative we opened the FXY call.
The hedge is no longer needed and we closed the position.
Unlike the FXY trade, the UUP $25 call is an indicator-based trade.
Our gold and gold stocks indicators remain firmly in bearish territory. Our bond indicator continues to flash a bullish inclination. However, since bonds have already had a nice run, we are hesitant to buy a call now.
The stock indicator has again regained a slight bearish tilt after being neutral for several weeks in a row. Lastly, the oil, oil stocks, and silver indicators continue to inhabit the zone between neutral and full-blown bearish.
| Indicator | Rating |
| Bonds | +2 |
| Gold | -2 |
| Gold Stocks | -2 |
| Oil | -1 |
| Oil Stocks | -1 |
| Silver | -1 |
| Stocks | -1 |
| U.S. Dollar | +2 |
Stock Talk
Curtis H
Hi Scott, given that the December 15, 2017 $23 put against the VanEck Gold Miners ETF (NYSE: GDX) is now priced at around $1.60 it seems obvious that I could get into this trade. I am relatively new to trading options but since we are buying and this is less than your entry price it seems like I could buy now. Please let me know if I am missing something. Thanks, Curt
Curtis H
Scott, sorry, I was looking at the Call Price but the put price is $2.31 so same question remains. Still a buy? Thanks, Curt
Scott Chan
Dear Curtis,
Sorry for the late reply. I missed your post.
In the future if you don’t see a reply within 48 hours, please send an email to questions@leeb.com or call me at 212-400-2241. For time sensitive questions such as this one, please call for a timely answer.
For your future reference, if we provide a suggested limit price, and the option price is below said limit price, AND our indicator’s latest readings is still in the appropriate range (i.e., +2 for call option trades, and -2 for put option trades) then the trade is still a “buy.” So had I seen your question in time, the answer would have been yes, it was still a buy. But if you are uncertain, please call.
Note that we closed out this trade yesterday.
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