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Bearish-dollar options volume surges in Invesco UDN ahead of Jackson Hole
Call options tied to the Invesco DB U.S. Dollar Index Bearish Fund rose about 1,144%, with flows attributed to debate over Treasury long-bond buybacks versus the Fed's Jackson Hole policy outlook.
The U.S. dollar faced renewed pressure into the Jackson Hole Economic Policy Symposium, and options markets showed signs that some traders are positioning for additional weakness, according to MarketBeat Ratings.
Derivatives activity highlighted a sharp rise in call option volume linked to the Invesco DB U.S. Dollar Index Bearish Fund, UDN, with an approximate 1,144% increase as investors weighed how Treasury debt-management changes could interact with restrictive Federal Reserve policy.
The surge was tied to the Treasury decision to double its long-bond buyback program, which investors are treating as a new factor in the currency outlook, MarketBeat Ratings said.
UDN is designed to express a bearish dollar view through short exposure to dollar futures versus a basket of developed-market currencies, while remaining cash collateral is invested in U.S. Treasury bills and other short-term vehicles, MarketBeat Ratings added. The fund trades around $18 per share and carries an annual dividend yield of about 4.85%.
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