The UUP trade. Speculation meets supply & demand (UUP)
Who would have thunk it? UUP, it’s shares so in demand the ETF was forced to trade as if a it were a closed end fund. Quick strategic thinking should tell you this is bullish and now the shares will trade above NAV, or @ a premium higher than the true value. *As noted the inverse of UUP UDN did not see any violent moves. Look at it this way, whoever owns UUP shares now knows they control the offer, “you buy from ME!”.
Today when the shares began trading after the halt, price discovery began. The ETF’s offers lifted on block buying eventually breaking violently higher on from what I believe was a reaction to possible hedging of sorts. The hedging in reaction to the massive call buying going down on the 23 strike right after the shares began trading. Big blocks were being snapped up like hand fulls of potato chips, why not they were “cheapies“. Market makers countered by buying up shares of the stock causing shorts covering. Snow ball affect.
There are two key factors which make this trading “anomaly” something worth placing bets on.
Whatever the case maybe the next few weeks are going to prove very interesting for trading in the UUP, USD and of course equities. Kinda like a perfect storm starting to rumble. I look at this whole “anomaly” as bullish the dollar. Why, because even before these calls were bot there was an apparent prior demand for shares in the UUP which is obviously bullish.