Should I Buy US dollar bear fund (UDN)? Finance YouTuber Analysis

The YouTuber previously recommended buying a call spread on UDN due to an expected decline in the dollar. While the trade has been profitable, he suggests the 'easy money' is gone, implying it's not a strong buy now but still a valid holding for continued dollar weakness.

“And while I still like that dollar bear ETF, the UDN, as that dollar falls further, the easy money is probably out on this one.”

The YouTuber recommends buying UDN, an ETF that takes a short position on the dollar, because he anticipates a significant weakening of the US dollar due to potential 'Mara Lago Accords' or other government policies aimed at boosting manufacturing. He notes the fund is near a 5-year low and could see a 10% upside return to $18-$19 per share, plus a 5.3% dividend yield, if the dollar weakens.

“Again the most direct effect of all of this would be a weaker dollar and while those Mara Lago Accords could cause the dollar to crash the dollar is almost definitely going to at least weaken against others which makes this Invesco US dollar bearish fund the ud in a very good investment.”

The YouTuber suggests a call spread strategy on UDN to profit from anticipated dollar weakness. He argues that a 10-15% drop in the dollar is likely due to central banks divesting from dollars, political chaos, and expected Fed rate cuts, which would reduce the dollar's appeal to foreign investors.

“Here we can buy the $18 strike call options for about 45 cents each and at the same time sell those same number of $19 call options for 8 cents each that's going to offset some of that that's going to make our total cost of 37 cents per share for the $18 to $19 spread.”

The YouTuber suggests buying UDN, an inverse ETF for the US Dollar, because he believes the dollar will drop from its multi-year highs due to trillion-dollar government deficits and a potential shift in the Fed's stance on interest rates. He anticipates a return to previous levels could yield a 7% return, or significantly more with an options strategy.

“A direct way to invest in this would be the Invesco US dollar bare Fund ticker udn which uses Futures to get that inverse exposure to the value of the dollar Rising when the dollar Falls.”

The YouTuber believes the US dollar will come under pressure as the November 17th government shutdown deadline approaches, leading to lower rates and a rethinking of US dollar holdings globally. He suggests buying the UDN ETF outright or using a call spread strategy.

“I still do like this trade I still do think that as we get closer to that November 17th shutdown the value of the dollar is going to come under pressure as the world really thinks it rethinks it's Holdings of US dollar so I still like this trade either buying the udn outright for that $8.37 or going in like we said like we said in that video and I'll link to that video in the description below but buying the $18 calls selling the $19 calls for that call spread going to get you a really nice return if it goes up up to $19 or higher”

The YouTuber recommends buying the Invesco Dollar Bear Fund, specifically using a call spread option strategy, to profit from an anticipated weakening of the US dollar. He cites potential government shutdown, slowing US economy, and a dovish shift from the Fed as catalysts for dollar depreciation, targeting a 127% return if UDN rises just 3.8%.

“We can make 127% return in 2 months on this call spread idea and that's if this bearish dollar fund goes up just 3.8% less than 4% upside on this and we make that 127% return.”