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Big Bearish Options Trade In Junior Gold Miners Pays Off
Analyst Paul Weisbruch of Street One Financial points out some big moves in some well-known ETFs over the last couple days, along with a highly profitable bearish options bet made this week.
The story in the past forty-eight hours has been sudden weakness in Crude Oil and related tracking ETFs like USO (down over 4% in past two sessions) as well as pressure in Emerging Markets across the board. Also recall that yesterday we pointed out February downside put buyers in EEM (iShares MSCI Emerging Markets) and this segment has been hit rather hard on higher rate prospects.
Precious Metals prices are sinking even faster this morning, also presumably on higher interest rate prospects after the FOMC quarter point raise yesterday, and we see benchmark ETFs like GLD (Gold) and SLV (Silver) for example trading at new recent lows.
UUP (PowerShares U.S. Dollar Index Bullish) is surging over 1% today once again (we highlighted what now looks like a buying opportunity and some upside call buying just last week in UUP) as it trades at new highs today in this rate environment following yesterday’s FOMC meeting.
Finally, GDXJ (Junior Gold Miners) January 32 puts traded more than 217,000 times earlier this week which is a huge trade for the name — and also was well-timed given the plunge there in the past forty-eight hours.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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