DailyPlay – Opening Trade (USO) – June 20, 2025

USO Bullish Opening Trade Signal

Investment Rationale

Investment Thesis
Rising geopolitical tensions in the Middle East are injecting a renewed risk premium into global oil markets, lifting the appeal of crude oil-linked ETFs such as the United States Oil Fund (USO). With the Strait of Hormuz under threat and oil futures reacting swiftly to headlines, USO stands to benefit as traders seek liquid instruments to express bullish crude views. While oil markets have at times decoupled from geopolitical events, the scale and persistence of current threats argue for sustained upward pressure on prices. Against this backdrop, USO offers a compelling vehicle to position for continued strength in oil.

Technical Analysis
USO has recently broken above its 50-day and 20-day moving averages, reclaiming the $82 level with strong volume confirmation. The ETF shows renewed upside momentum after a prolonged consolidation between $67 and $75, with RSI turning higher but not yet overbought—suggesting additional room to run. The next technical resistance lies around $85, while the $75 area now serves as initial support. The reclaim of the 200-day moving average earlier this quarter reinforces a bullish trend reversal and validates bullish exposure with defined risk.

Commodity Analysis
Oil prices remain sensitive to geopolitical developments, and USO’s value is closely tied to the front-month WTI crude futures it holds. As global supply risks intensify, especially via the Strait of Hormuz, traders are re-pricing crude oil with a heightened premium. USO benefits directly from this repricing dynamic as a proxy for crude.

Options Trade
The trade is a bull put vertical spread, selling the USO Aug 1, 2025 $80 put and buying the $74 put for a net credit. If USO is above $80 at expiration, the maximum reward is achieved. This setup allows traders to express a bullish view without requiring a further rally—USO merely needs to hold above the short strike. The $80 level is well above technical support and reflects confidence in elevated oil prices persisting short-term due to global instability. The risk-reward ratio is 0.86, meaning for every dollar at risk, we aim to make 86 cents. A favorable volatility skew enhances the appeal of this particular trade.

USO – Daily

Trade Details

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish Credit Spread

Details: Sell to Open 6 USO Aug 01 $80/$74 Put Verticals @ $2.77 Credit per Contract.

Total Risk: This trade has a max risk of $1,938 (6 Contracts x $323) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $323 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is expected to continue higher over the duration of this trade.

1M/6M Trends: Bullish/Bullish

Relative Strength: 9/10

OptionsPlay Score: 108

Stop Loss: @ $5.54 (100% loss to value of premium)

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Entering the Trade

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

PLEASE NOTE that these prices are based on Wednesday’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. 

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