Options Jive

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Trading an Expensive Dollar

Options Jive

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UUP, a pure proxy of USD, is a tough ETF to trade. So if we want to get exposure to USD, one choice is to trade other currencies which are highly correlated with USD. Among the major currencies, Euro is most strongly correlated with USD, with Euro-USD Correlation being negative 0.9. So we can short USD by purchasing Euro, and vice versa.

Once we decided to trade USD via Euro, we need to choose between Euro ETFs and futures. However, they both have unignorable problems, and we prefer vertical spreads on Euro ETF or futures, because it can help with the high capital requirement problem of ETFs and fast P/L velocity problem of futures.

Tune in to see more around specific setups revolving around the dollar!

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