USO Options Hot as ETF Extends Skid

One trader bet $3 million on a USO floor

Managing Editor
Nov 12, 2018 at 3:02 PM
facebook twitter linkedin


The United States Oil Fund (USO) has been in a freefall amid the collapse of oil prices in recent weeks. After slowly giving back gains throughout the day, December-dated crude futures fell 0.4% to trade at $59.93 per barrel, marking their 11th straight loss -- the longest losing streak in over 30 years. As far as the exchange-traded fund (ETF), USO is down 0.3% to trade at $12.66 -- set for its own 11-day losing streak -- but one options trader is betting on an end to this sharp pullback. 

At last check, nearly 192,000 USO puts have been traded -- three times what's typically seen at this point in the day, with volume pacing for the 99th percentile of its annual range. According to Trade-Alert, one trader sold to open 156,000 January 2019 11.50-strike puts, for about $3 million. By doing so, the trader expects the oil ETF to hold above the $11.50 level through January options expiration. 

On the charts, the ETF has shed 22% since its Oct. 3 high of $16.24. Since then, USO has been guided lower by its descending 10-day moving average, and is now on pace for its lowest close since April. A breach of that $11.50 level the trader is targeting would put USO at 2018 lows. 

Daily ETF Chart US Oil

Make the Most of the next Expiration Week Countdown!


 




 
Special Offers from Schaeffer's Trading Partners