USO - Open Position

Written on December 9, 2008 – 7:08 pm | by admin

Today I opened a position in USO.  I’ve been looking to get into oil around $40.  I don’t believe we will get to $20-$25 oil.  If that happens production will stop so much that supply will deminish.  I tried to establish a position in DIG yesterday which would benefit from a drop as well as a rise in oil prices but decided to not expose myself to another leverage ETF.  I have enough of that with all my SSO positions.  The details:

Buy: 100 @ $35 ($7.00 commission)
Initial Investment: $3507
Sold: $32 strike @ $4.20 ( $8.51 commission)
Net Investment: $3095.51
Expected Return: 2.88%

I am ok with holding this etf for a while.  I think there will be good premiums on this one because of its very oversold nature.  People will be expecting a rally and I think the time value on this one will be pretty good.


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