Mike Khouw Suggests A Way To Manage A Losing Trade In United States Oil Fund LP (ETF)

It is important for a trader to know what to do when price doesn't go in the right direction. CNBC Options Action's Mike Khouw found himself on a bad side of a trade recently as he recommended a bullish strategy in United States Oil Fund LP (ETF) USO on November 7. He explained that he tried to catch a falling knife in crude oil and he got hurt, but there are still things that can be done to reduce costs while waiting for a turnaround. If United States Oil Fund LP (ETF) closes below 28 on January expiration he will have to take a long position. In the meantime, he wants to sell January 28 calls for $0.40 to reduce his cost. Khouw added that commodities are mean reversing and by selling calls against a long position over time it is possible to reduce the loss.