Investors in the United States Oil Fund (USO) have new options available for June 10th expiration, including a put contract at a $133.00 strike price with a current bid of $5.00. This translates to a cost basis of $128.00 for the shares if the contract is exercised, providing a potential discount of roughly 3% from the current stock price of $137.59. Current odds suggest a 62% chance that the put contract may expire worthless, which would yield a 3.76% return, or 91.48% annualized.
On the call side, a contract at the $140.00 strike price is available with a bid of $6.40. Investors purchasing USO shares at $137.59 and selling this call would commit to sell at $140.00, potentially realizing a total return of 6.40% if the stock is called away. However, there is a 51% chance that this contract could also expire worthless, allowing investors to keep both the shares and the premium, which represents a 4.65% boost to returns or 113.19% annualized.
The implied volatility for the put contract is 75%, while for the call contract it stands at 72%. The actual trailing twelve-month volatility calculated is 44%.
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