On Friday I bought some coverage for my USO position. I’m long 100 shares of USO and bought two puts to give myself some downside protection. While USO was trading at $61.22, my limit order hit to sell the puts. I sold to close both October 66 puts (UNAVN) for $5.20 each and received $1028.50 after commissions. Originally I bought these puts for $871.49 a few days ago, giving me a realized profit of $157.01.
My trade was the high sale of the day which I have to like, but I’m already having seller’s remorse thinking the downside for oil has a lot farther to go. I sold it before expiration because it only has two days to go and like this morning’s trades, I wanted to get out with a profit while I could. I’ll probably get back in with some new USO puts soon. If not, I might just sell my USO shares for a loss to free up some cash. I probably have too much hinging on energy as it is now anyway.
I think you have the right idea, you’re just too early on the trade. Oil and gold continue to break key supports and as I type this we have energy stocks rallying. I was able to pick up a few of the PBR April $25 calls for $6.50 yesterday, I should be able to get at least $15 for them after we get a nice move up.