USO Update

The market opening today provided a bittersweet condition. The good news is that USO opened above our stop, lowering our exposure to assignment. However, we had been stopped out, buying to close the June 38 puts at $0.65. This produced a loss of $0.25.

Lessons learned, many! First, dropping down to the next lower strike price may have kept us in this position, and lowered our risk of assignment. Although we would have received a lower premium, we would have more likely made a profit.

Second, when we opened this position, intraday trading appeared to be pivotal, in that our intraday trending was on the verge of changing. Although the rise in volatility at the time may have contributed to higher premiums, I feel we should have taken a more conservative approach.

Lastly, and I think this should be a new rule for me, DON'T TRADE WHILE TRAVELING! I did not have access to all my tools, and this is a severe mistake.

I would like to explore more cash flow plays for USO, provided it finishes it's current retracement and continues its up trend.

I am on my way to Hawaii for my honeymoon. I will write again next week.

John
Sent from my Verizon Wireless BlackBerry