Tuesday Trade: USO

Trade: sell to open 10 USO Jan 2021 1.5 puts at $.51

For USO I have to be willing to put a little leg out to get what I want done.  I am eventually going to put on a risk reversal or a bull trade in USO, but with IV off the charts, I am going to start with a longer dated trade with tolerable risk.

If I sell the Jan 1.5 put at .50 10 times, I am literally risking $1000 to make $500.  That is great risk reward and a level that will fit almost any portfolio. Normally I do not like selling in this book but this is simply too good of a trade.

Once USO vol calms down, I will probably buy these puts back and buy a call spread that is longer dated.

Trade:  We sell 10 USO Jan 2021  1.5 put at $.51

With this trade I may be willing to let this one sit for a VERY long time as my downside is truly limited here.  IV could be insane for more than today, but this time next month I will be buying these back at a huge discount.

If they become worth less than $.25 I will cover, I will have to play the downside as it happens,  but would consider selling more into this if it keeps going.

Your Only Option,

Mark

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