I am selling the last of the March 2010 dollar bullish (UUP) calls today more for technical reasons than anything. These only have 3 weeks to expiration and unlike the S&P 500 calls or puts I buy - which I rarely hold more than a day or two - the dollar calls were a longer term hold. So the closer they get to expiration the more the value will erode as time premium disappears. Hence, I want to roll these out from March to April or perhaps May. But I don't want to do it today since the dollar is roaring, up nearly 0.7%, so I am just going to sell and look to roll over to a later date in the future.
Therefore, with the options up well over 30% today, and over 60% since I bought I am going to sell this last batch and try to buy April calls or May calls on a pullback. Ironically these dollar positions were supposed to be a hedge against a falling market, but the rest of the world is in such disarray the dollar has been rallying even as the market does.
Originally these calls were bought in late January [Jan 29, 2010: Bookkeeping - Long US Dollar with ETF and Calls] I took 1/3rd of the position off the table a week later, with a 36% gain [Feb 5, 2010: Bookkeeping - Selling 1/3rd UUP March 23 Calls] I held the rest as a market hedge but sold some off in dribs and drabs the past few weeks. Today I will let go of the rest at about a 60% gain in about 1 month. No complaints at all in this trade - wish they all worked so well.
I will still hold the much less volatile UUP ETF since it does not have the same issues as the options. Let me emphasize the dollar still looks great (chart wise) and this sale has nothing to do with issues with the chart or that I don't see more upside ahead. Until that 20 day moving average on the dollar is breached, the chart remains in buy the dip mode.
Long UUP ETF in fund; no personal position