{"id":28605,"date":"2015-06-03T23:35:03","date_gmt":"2015-06-04T06:35:03","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=28605"},"modified":"2015-06-03T23:37:31","modified_gmt":"2015-06-04T06:37:31","slug":"oils-declining-volatility-delivers-for-the-big-uso-trade-ahead-of-opecs-next-meeting","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/06\/03\/oils-declining-volatility-delivers-for-the-big-uso-trade-ahead-of-opecs-next-meeting\/","title":{"rendered":"Oil&#8217;s Declining Volatility Delivers for the Big USO Trade Ahead Of OPEC&#8217;s June Meeting"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on June 1, 2015. <a href=\"http:\/\/seekingalpha.com\/article\/3227426-the-winning-trade-on-the-united-states-oil-etf-ahead-of-opecs-next-meeting\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>OPEC (the Organization of the Petroleum Exporting Countries) meets this week on June 5th in a much different price environment for oil than the November, 2014 meeting. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28606\" aria-describedby=\"caption-attachment-28606\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_WTIvsBrent.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_WTIvsBrent.png\" alt=\"Makings of a bottom for oil: higher highs and higher lows for Brent; a &quot;W-bottom&quot; for WTI\" width=\"550\" height=\"365\" class=\"size-full wp-image-28606\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_WTIvsBrent.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_WTIvsBrent-300x199.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28606\" class=\"wp-caption-text\">Makings of a bottom for oil: higher highs and higher lows for Brent; a &#8220;W-bottom&#8221; for WTI<\/figcaption><\/figure><br \/>\n<strong>Sources: US. Energy Information Administration, Crude Oil Prices: West Texas Intermediate (WTI) &#8211; Cushing, Oklahoma [DCOILWTICO], <a href=\"https:\/\/research.stlouisfed.org\/fred2\/series\/DCOILWTICO\/\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>, May 30, 2015.<br \/>\nUS. Energy Information Administration, Crude Oil Prices: Brent &#8211; Europe [DCOILBRENTEU], <a href=\"https:\/\/research.stlouisfed.org\/fred2\/series\/DCOILBRENTEU\/\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>, May 30, 2015.<\/strong><br \/>\n<\/center><\/p>\n<p>Going into that March low for WTI, <a href=\"http:\/\/seekingalpha.com\/article\/3004816-a-race-against-volatility-and-bearish-sentiment-for-the-united-states-oil-etf\" target=\"_blank\">I reported on a large options bet<\/a> on the United States Oil ETF (USO) that Barron&#8217;s covered briefly. The options expire on January, 2017 and bet that USO will trade between $12.30\/share and $25.70\/share by expiration. With the upcoming OPEC meeting, I thought this would be a good time to check in on that bet. The following calculations cover prices from March 5, 2015 to May 29 for the call and put options expiring January, 2017.<\/p>\n<p>$19 Call: $3.42 vs $3.97 = loss of $0.55 or 16%<br \/>\n$20 Call: $2.95 vs $3.40 = loss of $0.45 or 15%<\/p>\n<p>$19 Put: $3.50 vs $2.45 = gain of $1.05 or 30%<br \/>\n$20 Put: $4.06 vs $2.90 = gain of $1.16 or 29%<\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28612\" aria-describedby=\"caption-attachment-28612\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_OVX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_OVX.png\" alt=\"The CBEO Oil Volatility Index (OVX) has declined back to &quot;pre-OPEC&quot; levels\" width=\"550\" height=\"375\" class=\"size-full wp-image-28612\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_OVX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_OVX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28612\" class=\"wp-caption-text\">The CBEO Oil Volatility Index (OVX) has declined back to &#8220;pre-OPEC&#8221; levels<\/figcaption><\/figure><br \/>\nSource: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28607\" aria-describedby=\"caption-attachment-28607\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_USO.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_USO.png\" alt=\"United States Oil ETF (USO) has followed a well-defined path since first breaking the primary downtrend in late January\" width=\"550\" height=\"375\" class=\"size-full wp-image-28607\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_USO.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150529_USO-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28607\" class=\"wp-caption-text\">United States Oil ETF (USO) has followed a well-defined path since first breaking the primary downtrend in late January<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>The USO chart shows that the ETF has neatly followed and delivered on several key technical signals. {snip}<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: long USO put options <\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on June 1, 2015. <a href=\"http:\/\/seekingalpha.com\/article\/3227426-the-winning-trade-on-the-united-states-oil-etf-ahead-of-opecs-next-meeting\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on June 1, 2015. Click here to read the entire piece.) OPEC (the Organization of the Petroleum Exporting Countries) meets this week on June 5th in a much different price environment for oil than the November, 2014 meeting. {snip} Sources: US. Energy &#8230; <a title=\"Oil&#8217;s Declining Volatility Delivers for the Big USO Trade Ahead Of OPEC&#8217;s June Meeting\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/06\/03\/oils-declining-volatility-delivers-for-the-big-uso-trade-ahead-of-opecs-next-meeting\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[199,377],"tags":[536,538],"class_list":["post-28605","post","type-post","status-publish","format-standard","hentry","category-commodities","category-oil","tag-oil-2","tag-uso"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Oil&#039;s Declining Volatility Delivers for the Big USO Trade Ahead Of OPEC&#039;s June Meeting - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/06\/03\/oils-declining-volatility-delivers-for-the-big-uso-trade-ahead-of-opecs-next-meeting\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Oil&#039;s Declining Volatility Delivers for the Big USO Trade Ahead Of OPEC&#039;s June Meeting - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on June 1, 2015. 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Click here to read the entire piece.) OPEC (the Organization of the Petroleum Exporting Countries) meets this week on June 5th in a much different price environment for oil than the November, 2014 meeting. {snip} Sources: US. Energy ... 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