New Investment Opportunities Emerge for United States Oil Fund Options
March Options Expiration Highlights Potential Strategies for Investors
Investors in United States Oil Fund (Symbol: USO) gained new options today, set to expire on March 21st. With a full 70 days until expiration, these fresh contracts may offer sellers of puts or calls the chance to earn higher premiums compared to contracts that expire sooner. Stock Options Channel has identified two noteworthy contracts among the March 21st offerings — one put and one call.
The put contract available at the $79.00 strike price currently has a bid of $2.57. If an investor sells this put contract, they effectively agree to buy the stock at $79.00 while collecting the premium. This arrangement lowers their cost basis to $76.43 per share (not including broker commissions). For those interested in acquiring shares of USO, this option could be appealing compared to the current share price of $81.04.
The $79.00 strike price is around 3% below the current trading price, meaning it’s considered out-of-the-money by that percentage. There is a 63% chance, based on current analytical data (including greeks and implied greeks), that the put contract could expire worthless. Stock Options Channel will monitor these odds and provide ongoing updates on the contract details page of their website. If the contract does expire without value, the premium would yield a 3.25% return on the cash commitment, equating to an annualized rate of 16.97%. We refer to this potential return as the YieldBoost.
Below is a chart showcasing the trailing twelve-month trading history for United States Oil Fund, with the $79.00 strike price indicated in green:
Call Options Also Present a Profit Potential
Turning to call options, there is a contract at the $82.00 strike price, currently bidding at $3.55. Investors could buy USO shares now at $81.04 and then sell this call contract as a “covered call,” committing to sell the shares at $82.00. By collecting the premium, this strategy could yield a total return of 5.57% if the stock is called away at expiration (excluding dividends and broker commissions). However, significant upside potential may be missed if USO shares increase considerably, emphasizing the importance of reviewing both historical trading data and business fundamentals.
Below is a chart illustrating USO’s trading history over the past twelve months, with the $82.00 strike highlighted in red:
The $82.00 strike is approximately 1% above the current trading price, indicating it is also out-of-the-money. There is a 49% chance the covered call contract could expire worthless, allowing the investor to keep both their shares and the collected premium. Stock Options Channel will track these odds and maintain a detailed historical record of this contract. If the covered call expires worthless, the premium would equate to a 4.38% additional return, representing an annualized rate of 22.86%, another instance of YieldBoost.
The put contract’s implied volatility stands at 29%, while the call contract shows 28% implied volatility. The actual trailing twelve-month volatility, calculated from the last 250 trading days and today’s price of $81.04, is 27%. Investors seeking more opportunities in options contracts can explore StockOptionsChannel.com.
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The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
