USO liquidation?

Discussion in 'Options' started by FSU, Apr 21, 2020.

  1. FSU


    Since USO is a proxy for oil using oil futures, I think there is a real risk of it being liquidated. Might be worth buying a few 1 or .05 puts if you can get them cheap enough. Seems like the market may be underpricing this outcome, although with oil down big again today, the opportunity may not be there. The key here will be what price you have to pay.

    I was trading XIV a while ago, a proxy for VIX through futures and saw this happen first hand.

    Any other thoughts?
  2. Anyone else remember T. Boone Pickens arguing "peak oil @ $200/bbl"?
    JesseJamesFinn1, cdcaveman and Nobert like this.
  3. RedDuke


    Very much, he also claimed that we will never see oil again below 100 in our life time.
    cdcaveman, trader99 and Nobert like this.
  4. So I want to make a thread about long term USO. Am I being a retard accumulating shares right now? I remember someone here saying long term ETF is stupid for some reason. I have 600 shares around 4.25 and plan on buying more.

    I think it was bc of rolling the futures or something and the curve of USO is permanently going down...

    Must be this ;

    Contago and negative roll yeild?
    Last edited: Apr 21, 2020
    cdcaveman likes this.
  5. FriskyCat


    bought a few of USO 1.00x exp 05/01 at .05. I agree with OP, it's worth a small gamble.
    cdcaveman likes this.
  6. Sig


    I got bitten by DWTIF on that a couple weeks ago. I was dead right about the direction of oil but the ETN effectively went away because it traded below zero first!
  7. USO does not track the spot price of oil. Unlike GLD, where you are actually buying gold, USO holds futures contracts. It is not the same thing. It was always a shit investment, regardless of price, but here is the real kicker. USO is unable to create more "units" so it is now trading a a 20% premium of its NAV.

    If CLM0 drops below $10, I believe we will see USO forced to liquidate.
  8. Nobert


    Ironically, to my surprise today, both falls under the ETF flag.

  9. Yeah, I kinda gathered that from trading it. Feels like a dog shit instrument lol. CL already traded below 0...
    #10     Apr 21, 2020