Recall back on May 8, 2015, Chris Kimble was interested in shorting the dollar if it bounced up. Phil was more bullish, suggesting there was a good chance of the dollar shorting higher. 

Here’s what I wrote:

“These views are not inconsistent, actually, the dollar could bounce and drop again. We’ll be watching.”

Chris’s chart of the $USD from May 8, 2015: 

Note that in the ensuing three weeks, there was a drift lower followed by a bounce higher along with a “kiss” at resistance. 

Let’s look at Phil’s trade from May 8: “UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I’d prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 calls for $1.05 and sell the Sept $25 calls for $0.50 for a net $0.30 credit on the $1 spread so the upside is $1.30 at $25 and worst case is owning UUP for net $24.70 (about the current price).”

Updated prices:  UUP is currently trading at $25.07 (it’s up about $0.37 from May 8). 

Jan $25 puts sold for $0.85 are now at $0.72 ($0.13 profit). 

Sept. $24 calls bought for $1.05 are now $1.17 ($0.12 profit) and Sept. $0.25 calls sold for $0.50 are now at $0.54 ($0.04 loss) for a total gain on the bull call spread of $0.08 (0.08/0.55 = 14.5% return on the bull call spread (the net cost of the bcs was $0.55). 

UUP Chart (6/4/15)

Previously, the bearish wick patterns of the $USD have led either to little change during the subsequent year period, or to rather dramtatic losses.  

 

Chris noted: “Almost 90-days ago the US Dollar was dealing with a 14-year resistance line that dated back to its all-time highs in 1985 (chart below), around the 95 level. It pushed above this resistance line and closed just above the 100 level on the week ending 3/13/15. Since then the $USD has backed off some, coming back to test the old resistance line as potential test of support for its first time in history, around the 93 level.”