Options News
$USO bears score big as oil drops
Option traders turned significant profits today on downside positions in the U.S. Oil Fund opened at the beginning of the week. On Monday, Investitute’s proprietary programs showed that 30,000 Weekly $13.50 puts expiring on June 8 were purchased for $0.04 to $0.05 with shares at $14.51. These were clearly new positions, as open interest in the […]
Option traders turned significant profits today on downside positions in the U.S. Oil Fund opened at the beginning of the week.
On Monday, Investitute’s proprietary programs showed that 30,000 Weekly $13.50 puts expiring on June 8 were purchased for $0.04 to $0.05 with shares at $14.51. These were clearly new positions, as open interest in the strike was only 6,184 contracts before the activity appeared.
Those puts traded for $0.21 during today’s session, more than 4 times their initial price. The stock declined 5.9% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.
USO was down 4.34% to $13.67. The exchange-traded fund fell as West Texas Intermediate oil futures slid from news of a deal between Russia and OPEC to life production.