USO bull put spread play

Discussion in 'Options' started by darwin666, Dec 18, 2008.

  1. since I think USO is too low,

    and I am bullish on OIL. but in the long term

    I was contemplating a covered call. But since USO is a complex ETF and charges 0.5% fee plus what ever it does to reflect the price of OIL is hocus/pocus, I thought about a put spread play

    In my ROTH IRA, I sold jan 2010 25 to 15 spread for 320$. ie. 680 will get me 320

    47% ROI.. .if USO falls I have protection from current price 33 to 22$. ie. 33%

    how would you rate this play.. IT IS a LEAP.. 1.1 year is a loong time for some of us. but that is what I like doing in my IRA.

    I think this is better than doing a covered call.
  2. This spread is less risky than a covered call.

    I assume you sold the Jan 10 15/25 <b>put</b> spread and collected $320. A very reasonable play if bullish on USO.