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October 22nd, 2009 at 9:37 am
samz, as you say it’s a crowded trade, but if you’re already bearish on the markets it could make sense for you as a hedge trade against your bear portfolio.
You could go long UUP puts, perhaps doing it as a spread, like a diagonal. Or you could short dollars against something like the Euro, buying FXE calls or call diagonals, or going long whatever currency index you prefer. One advantage with option spreads on these is that if there is a big short squeeze, you could take that as an opportunity to buy back the short leg.