Speaking of down enough, oil back at $36.70 with less than two months until Memorial day AND the OPEC meeting on 4/17 (not 4/14) means it's a good time to go long on UCO (ultra-long oil) again. We already have short USO July $8.50 puts in the OOP that we sold for $1.10 (now 0.50) on a UCO spread we already cashed in so we won't sell more puts in the OOP but, the whole trade would be:
- Sell 10 USO July $9.50 puts for 0.92 ($920)
- Buy 10 UCO July $7 calls for $2.20 ($2,200)
- Sell 10 UCO July $10 calls for 0.95 ($950)
That's net $330 on the $3,000 spread (as a new trade) or, in the OOP, we are JUST buying the $3,000 UCO spread for $1,250 so "only" a $1,750 upside (140%) if UCO is back over $10 in the summer.
Worst case is owning USO at net $9.83 - about where it is now with $37.72 oil - that should be a good bet all by itself for the long-term. So this is a trade with almost no downside when you consider your worst case is owning $9,830 worth of USO and, if oil is under $37.50 in July - the money you save on gas will offset the losses on the ETF anyway!
Definitely a Top Trade idea!
