"Straddle" on USO

I like it!
1 contract, risk $172, breakeven at $3 or $8 by 16Oct20
oil goes to $30 a barrel by 21jan22, make $2000, risk/reward 1/11
what's not to like?

Acctually, I like this better, expiration 17Jul20 and 15Jan21, 4/5 strike
breakeven is $2.87 and $5.50, and delta is -40@$3.00 and +92@$10.00.
 
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consider October expiry on buying both the call & put.

ignoring commissions, based on last trade just before EOD the trade will cost you approx $1.60.

taking $4 strike price, max loss approx $1.60 on expiry if the stock is exactly $4

stock needs to be above $5.60 or below $2.40 to be profitable.

are you bullish or bearish on this, where do you see USO being in October?
 
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unconventional wisdom said:
Seems to me to be a no-brainer. USO is either going to 0 or heading back up.

Straddled by buying an Oct 2020 put and buying a January 2022 call (less then 1$ each).

Thoughts?

I really like it! I have closed all my strangles and they were tough. I like your strategy better. Short term bear & long term bull seems like the right strategy for USO for the foreseeable future. I will start this trade next week. Thanks for sharing!!!
More...
 
thanks all for the feedback!

i'll take a short (albeit Pyrrhic - feeling bad for the oil workers at $4 - now $1.30!!! oh shit!!! oil - did not see this coming!) victory lap here - the USO put is up 50% today and remarkably the call is up 2.3% (must be due to the increase in volatility).
 
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Also remember from the old days of SVXY when they changed their exposure to 1/2x instead of 1x, USO can basically do the same to limit their downside (And upside potential). This move kills option premiums as volatility is almost cut into half.

USO always has the option to reverse split (Which can be very soon) and options will adjust accordingly in a whole new series depending on the reverse-split factor.
 
I haven't traded straddles very often, but I am yet to have a profitable one. The collapse in IV seems to wipe out most of the profitability in my experience, or the spread is so bad it makes it very difficult to close the position out. I hope it works out though.
 
USO is halted now (Regulatory halt). Looks like some material information will be coming out very soon. Beware of structural changes.
 
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