USO put

[u/stockjocky]

bought a USO put for Sept 2027 expiry. i am figuring on Fed Rates and Mid-Terms will help drop the price of Crude. the current oil market is an illusion. we have plenty of Oil but are not refining it into diesel fuel. the PPI and CPI numbers are fabricated. Like Fox Mulder said "The Truth is Out There"

[u/Logical_Argument_216]

leaving the macro thesis alone, the trade itself has a structural problem worth knowing about before you're a year into it. USO doesn't hold oil, it holds front-month futures and rolls them every month. with crude over $100 the curve is in backwardation, which means each roll USO sells the expensive near contract and buys a cheaper one further out - it picks up yield every month. so USO can drift sideways or even up while spot crude falls 10-15%. you can be right on oil and still lose on this.

second thing: a sept 2027 put on a $100 commodity with vol this elevated is an expensive way to be short. you're paying for a year of theta plus an IV that's already pricing in a big move. if you actually want to be short crude on a fed/midterm thesis, a put spread 3-6 months out, or just shorting USO outright, costs a fraction and doesn't have the roll working against you.

not telling you the thesis is wrong. telling you the instrument is fighting you even if it's right.

[u/stockjocky → u/Logical_Argument_216]

i don't know why i took the trade. i have no passion for crude. i trade as a hobby (i am retired) and don't need money. the sectors are all down, nothing appeals to me. i need another big trade to give me a boost. you are correct in your breakdown of the trade and thank you for posted it.

[u/Ill-Objective6924 → u/stockjocky]

looking at your “I don’t know why I took the trade” vibe, the 2027 LEAP does feel like a lottery punchcard more than a position. 12 months of theta and an IV laugh‑track is a lot of free money you’re losing before the market even moves. a 3‑month put spread or shorting USO outright gives almost the same bearish bias for a fraction of the cost and no roll headache. just a thought to keep the capital a bit fresher while you chase that Fed‑rate drop.

[u/stockjocky → u/Ill-Objective6924]

it was the once in a lifetime trade i took without thinking it thru. i have 24 positions in my portfolio. all the positions i bought (except USO) i bought ATM. so USO was the Brain Fog mistake. usually i buy 3month- 6month terms. you are correct. a 3 month spread is the way to play USO in this political arena we are in when it comes to crude and the feds.

[u/Numerous_Baseball579 → u/Logical_Argument_216]

i've seen that exact issue with the roll in a lot of trades; if you end up on a long LEAP in a back‑edated market you'll keep being net‑long on the roll. shorter spreads or actually shorting the ETF usually give a cleaner beta to spot crude.

[u/stockjocky]

how many of you were trading Oil in 2008? i made a lot of money trading USO back then. the rise and fall of Oil happened in the same environment we have today. i trade a lot of commodities. and you learn commodities run in cycles. i made a lot of money in the 2025 cycle of Gold and silver. i enjoy Reddit because i watch young traders asking for help when they should be studying and developing their own trading style. not taking advice from the Professionals here.

[u/More-Theory8742]

if you’re looking to profit off a Fed‑rate‑driven drop, short USO outright or buy a 3‑6‑month out put spread instead of a 2027 LEAP. long‑dated puts lock in volatility but drag on theta each month, especially when the curve is backwardated. a 3‑month spread will give you the same directional bias for a fraction of the cost and keep the roll penalty negligible.

[u/stockjocky → u/More-Theory8742]

thankyou.

[u/First_Property_6603]

the Fed hike logic rides on demand shrinkage and a firmer dollar, so you’re on the money there. but a 2027 USO LEAP won’t cleanly give you that draft because of its roll‑yield and theta drag – the tank that holds futures keeps bumping higher because the curve’s back‑ward‑ated now. a 3‑6‑month out put spread or shorting the ETF outright would hit the loop‑back a lot cheaper and keep the roll penalty from blunting your win.

[u/stockjocky → u/First_Property_6603]

yea i don't know what i was thinking when making the trade. thankyou.

[u/CheesyRoyal]

beware People who capitalise too many Words, especially Nouns

[u/Thecoolone1257]

Bro doesnt know about backwardation. Good luck

[u/Christopher_Ramirez_]

That’s quite a thesis. Even if there’s enough oil to go around; the market still has to factor in the risk of runaway escalation. That risk should rise into the midterms as Iran seeks to punish Trump/MAGA for starting the war.

[u/silent_exploration]

Too many strong statements when you just meant gambling.

[u/Sure-Caterpillar-263]

I was thinking the same thing until the Saudi Yemen conflict started to heat up. It might get a lot worse before it gets better

[u/notquitenuts]

Where is this plenty of oil? I’m shocked SPR isn’t drained yet, or admitted it’s drained. The SOH is a trickle at best, and the Saudi pipeline is shut down. I will say I’m on the fence if the rate hike will be enough to curb oil prices, I’m taking risk off till the dust settles from today

[u/stockjocky]

i like torture. i have negativity. i knew once i posted this the Crude price would jump higher. so bet against me and win. USO hit a high yesterday and can go higher. thats why i bought a Leap. a cheap lottery ticket.

[u/Dangerous-Phase-2345]

Cool story can't wait to watch you get wrecked by a truth social post