Mike Khouw Ready To Close Bearish UUP Position, Now Seeing Bullish Opportunity Ahead

In November, CNBC Options Action's Mike Khouw placed a bearish bet on Invesco DB US Dollar Index Bullish Fund UUP. He bought the March $25 puts for 45 cents, and they are now worth 90 cents. He thinks it is time to close the position and bet on a bounce in UUP.

Khouw is bullish because of rising rates and an improving economy, but also because other governments are also expanding their balance sheets. He believes their currencies are going to experience the same types of pressure the U.S. dollar has experienced.

To make a bullish bet on UUP, Khouw wants to buy the March $24 calls for 50 cents. The trade breaks even at $24.50 or around 1% above the closing price on Friday.