United States Oil Fund, LP (USO) PriceWatch Alert At $32.15 Break Even

Posted: Monday, July 06, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

United States Oil Fund, LP (PCX: USO) closed yesterday at $36.05. So far USO has hit a 52-week low of $22.74 and 52-week high of $119.17. USO has been showing support around 35.77 and resistance in the 36.49 range. Technical indicators are Bullish. USO appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at an Oct '09 35 covered call (UBO JI) for a net debit in the $32.15 area. That is also the break even stock price for this trade. This covered call has a 103 day duration, provides 10.82% downside protection and an 8.86% assigned return rate for a 31.41% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the USO Jan '11 16 Call (OTJ AP) and selling the Oct '09 35 call (UBO JI) for a $16.75 debit. The trade has a 103 day life and would provide 9.15% downside protection and a 13.43% assigned return rate for a 48.00% annualized return rate (for comparison purposes only). [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]