Stock / Symbol: [private_monthly]United States Oil Fund / USO[/private_monthly]
Option Strategy: diagonal call spread
Price at trade post: $31.25
Reasoning: Over the past 2 years, USO has traded within a 15 point range (30 - 45), and it's currently near the low end of it's range / close to support at 30. Oil would likely have to break below $70 per barrel for USO to print under $29. With USO trading over $31 by next Friday, we'll close the position for a profit. If we don't get called away (trading under $31), we'll have taken in $100 in premium for an uncalled return of 15% in one week.
Max Risk: $555
Profit Range: $30 - $35.75 by Oct 7
Max Reward: $72 or 12.9% @ 31 by Oct 7
Suggested downside stop @: $30
Suggested upside stop @: $34
Trade Details:[private_monthly]
BTO 1 USO Jan12 26 Call
STO 1 USO OctWk1 31 Call
for a net debit of $5.55 per contract (GTC, limit order)
[/private_monthly]
Requirements:
Cost/Proceeds: $555
Option Requirement: $0
Total Requirements: $555
Estimated Commission: $12.95
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