DailyPlay – Opening Trade (USO) – July 13, 2022

Bearish Opening Trade Signal

View USO Trade

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish

Details: Sell to Open 3 Contracts Aug 12, 2022 $73/$83 Call Verticals @ $3.05 Credit.

Total Risk: This trade has a max risk of $2085 (3 Contracts x $695 per contract).

Trend Continuation Signal: This is a Bearish trade on an ETF that is experiencing a bearish trend.

1M/6M Trends: Bearish/Mildly Bearish

Technical Score: 10/10

OptionsPlay Score: 94

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

In my view, oil has broken its key support and should head lower over the coming weeks. As such, let’s look to short a USO Aug 12th $73/$83 call spread for what closed yesterday at $3.08 mid. That’s approx. 31% of the spread differential, and with the daily and weekly cloud charts breaking down, I expect that we will see oil complete a daily Sequential -13 count – something it hasn’t done since its bottom in late-October 2020.

USO – Daily

EUSO – Weekly