Shares of (USO) (OIL) (OLO) (DBO) (UCO) Trade Down as Oil Plunged 15% Last Week

These oil ETFs and ETNs traded down to end the week, as oil prices plummeted 15 percent last week, taking United States Oil Fund (USO), Goldman Sachs Crude Oil Total Return ETN (OIL), PowerShares DB Crude Oil Long ETN (OLO), PowerShares DB Oil Fund (DBO) and ProShares Ultra DJ-AIG Crude Oil ETF (UCO), and others, down with it.

Light, sweet crude oil for June delivery on the New York Mercantile Exchange dropped $2.62 to settle at $97.18 a barrel, matching the eight-week low of March 15. The U.S. Oil Fund (USO) closed down 1.1 percent on Friday.

For the week, the June oil futures contract fell 14.7 percent to $113.93.

Light, sweet crude for June delivery fell $2.62, or 2.6%, to close at $97.18 a barrel on the New York Mercantile Exchange.

In London, Brent crude finished the day off $1.67 at $109.13 per barrel on the ICE Futures exchange.

Republicans went on the offensive against higher oil and gas prices by passing a bill to hasten the leasing process dragging on in the Gulf of Mexico as the Obama administration drag their feet on taking action. The bill would also require leasing to be allowed off the coast of Virginia.

According to Rep. Michael Burgess (R-Texas), the bill helped push down the price of oil as it sent a message to the market they're serious about the future supply.

All Obama has done so far has obsessed on the fantasy of green, clean or so-called alternative energy; a dubious matter at best, and at worst, ignoring what they country needs now and is available to it.

In other Nymex trading for June contracts, heating oil fell 4.12 cents to $2.8457 a U.S. gallon and gasoline futures were down 0.53 cents to $3.0901 a U.S. gallon. Natural gas fell 3.4 cents to $4.297 per 1,000 cubic feet.

United States Oil Fund (USO) closed Friday at $38.87, falling $0.45, or 1.14 percent.

United States Oil Fund LP (USO) Ratio Put Spread

Shares in the United States Oil Fund (NYSEArca:USO) hit new 52-week high Monday morning, but one huge options player is positioning for the price of the underlying to pull back ahead of April expiration. It appears the trader initiated a sizable ratio put spread to benefit from limited bearish movement in the fund’s shares.

The USO’s shares increased as much as 1.1% at the start of the session to secure an intraday- and two-year high of $42.79. The contrarian player purchased 12,500 puts at the April $41 strike for a premium of $1.71 each, and sold 25,000 puts at the lower April $38 strike at a premium of $0.64 apiece. Net premium paid to establish the spread amounts to $0.43 per contract.

The ratio spread positions the investor to make money should shares in the USO fall 5.2% from today’s high of $42.79 to breach the effective breakeven price of $40.57 ahead of April expiration day. Maximum potential profits of $2.57 per contract are available to the put player if the fund’s shares drop 11.2% to settle at $38.00 at expiration. The ratio of twice as many sold lower-strike puts suggests the investor foresees limited downside movement in USO shares. But, the parameters of the spread expose the trader to losses in the event that the price of the underlying fund declines 17.2% off today’s high to slip beneath the lower breakeven price of $35.43 within the time remaining to April expiration.

Shares in the USO last fell under $35.43 on February 16, 2011. Over 193,000 option contracts have changed hands on the USO as of 11:40am, with investors prefering calls over puts, trading approximately 1.5 call options on the fund for each single put option in play.

USO closed Monday at $42.37, up $0.04, or 0.09 percent.





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Options on United States Oil Fund (NYSEArca:USO) Hit Record Volume

Oil and retail stocks were the big focus in the options market as chaos in Libya and pricier energy weighed on sentiment and helped the volatility index reach a 2011 high.

Options on the United States Oil (NYSEArca:USO) fund surged to record volume as light, sweet crude for April delivery, touched $100 a barrel for the first time in more than two years. Options traders grappling for hedges and inexpensive exposure to oil favored bullish "calls" that profit with further gains. Calls convey the right to buy shares later at a set price.

"It's all related to the squeeze at the pump," Oppenheimer & Co. chief options strategist Michael Schwartz said of Wednesday's action in energy options. The United States Oil fund added $1.31, or 3.4%, to $39.80 as worries of supply disruptions mounted.

About 332,000 bullish calls to buy the oil fund changed hands, versus 166,000 bearish "puts" to sell, according to data from options analytics firm Trade Alert. The activity was nearly four times the recent daily volume. Puts convey the right to sell shares at a later date.




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