Trade of the Week: Crude Oil

Oil, Options, Videos
by Jay Soloff
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One of the secondary reasons for the market crash (after COVID-19) has been the extreme selloff in the price of oil. Crude oil has dropped to around $20 a barrel for the first time since 2002 due to a price war between Russia and Saudi Arabia.

One popular method for trading crude oil is United States Oil ETF (USO), which has dropped all the way down to about $4.50 per share. Some trader or fund is taking advantage of the low price by using very long-term options, all the way out to January 2022.

The trade involves selling puts to help finance calls, which makes a lot of sense given how low the price of USO is.

Author: Jay SoloffJay Soloff is the Options Portfolio Manager at Investors Alley. Jay is also the editor for 48-Hour Income, Options Insiders, and co-editor of Weekly Income Accelerator and POWR Income with Tim Plaehn. Prior to joining the online investment world, Jay was a floor trader and market maker on the CBOE, the world's largest options exchange. His experience includes trading a multi-million dollar options portfolio in equities options as well as serving as a consultant to Wall Street options trading groups. Jay also spent time as a senior analyst at a hedge fund of funds, where he analyzed professional options funds as well as traded option strategies for hedging purposes. All told, Jay has 20 years of options trading experience. He received his undergrad degree in Economics at the University of Illinois - Champaign, and his MBA and Master of Science in Information Management from Arizona State University.
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