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business newsBig Spill in USO Options
Buyers rush in to catch its fall.
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Crude oil is nose-diving today, but the call buyers have moved in on the drop.
The US Oil Fund (USO) is down more than 7% today to trade at $27.37. The drop mirrors the fall in the commodity itself, but while the actual futures remain within the recent range, the USO exchange traded fund is now down to its lowest levels since March 16. The futures are 45% off the February low, while the USO is only 20% higher than its low.
In the midst of this drop, optionMONSTER's Heat Seeker system is showing heavy action in the July 28 calls, where more than 16,000 contracts have changed hands, the majority of them purchased even as the price has dropped from $2.90 to $2.65. The open interest at that strike is just 2,699 contracts, indicating fresh opening positions.
The implied volatility of those calls is 55%, in line with the average and the 30-day historical volatility, which have both been falling from November highs and are now at their lowest levels since September.
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