Options trading in large stock and currency ETFs shows some investors are moving toward a risk-off stance as the S&P 500 drops back below the key 1,400 level.

Buyers of protection via downside puts in SPDR S&P 500 (NYSEArca: SPY) emerged on Wednesday as equities finished near their lows for the day, said Paul Weisbruch, head of ETF/options sales and trading at Street One Financial.

Stock opened lower Thursday, with the Dow shedding over 100 points.

“Good sized call buyers were present in PowerShares U.S. Dollar Index Bullish (NYSEArca: UUP) yesterday, and we have pointed out similar activity [recently]with put buying in CurrencyShares Euro (NYSEArca: FXE),” Weisbruch wrote in a note to clients Thursday.

“With UUP weakening this week and falling below its 50-day moving average for the first time in a few weeks, it seems that the call buyers are positioning for a potential bounce,” he added.

Most of the time over the past year, a strengthening dollar translated to lower equities and precious metals prices. However, market correlations are fluid, and stocks have been rising with the dollar recently. [Why Stock ETFs and the Dollar are Moving Higher Together]

PowerShares U.S. Dollar Index Bullish

Full disclosure: Tom Lydon’s clients own SPY.

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