Quote:
Originally Posted by 7sins
If anyone is looking for a contrarian position that is going against current trends, look at puts on UUP. This is a position I am dollar cost averaging into and not financial advice. The dollar is the strongest it has been in over 20 years, this does not mean it can't get slightly stronger but I think we are near a peak top for dollar strength for the next year. When markets eventually stabilize and or the FED stops raising rates while other central banks continue raising, this will cause the dollar to weaken. The very least, like any asset class, there will be mean reversion where the dollar normalizes. There are very few people on this side of the trade looking at the option chains (which maybe is a sign haha) but looking at IV, it is absurdly low, meaning the premiums are very cheap as no one prices this in. Trying to be one step ahead of future trends here.
Thus once consensus changes and the anticipation for the dollar is to weaken, even if the dollar doesn't in actuality, the anticipation will price these premiums higher. 2025 gives you a 1000+ day runway. Something to ponder for those wanting an atypical trade.
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Absolutely nailed the top of the dollar on this trade on Oct 8th. Hopefully some of you hopped on this train and made $$$$$ with puts on $uup, dollar has taken a beating the last few weeks, look at those gaps down! 8 point move might not look like much for equity investors but this is massive in FX, typically big moves were 2-3 points precovid - look at the chart before this year, you can see the dollar basket variance is low. I took most of my gains out and will watch closely for re-entry. Easy money on this one.
