Dan Nathan Sees Unusal Options Activity In United States Oil Fund LP (ETF)

On CNBC's Options Action, Dan Nathan analyzed the options activity in United States Oil Fund LP (ETF) USO. He noticed a bearish options trade on a day when United States Oil Fund LP (ETF) USO traded 4.39 percent higher. When the ETF was trading at $17.60 there was a buyer of 66,000 contracts of the May 16.50 / 14.50 put spread. The trader paid $0.50 for the put spread, which is a maximal risk for this trade, while the maximal gain is $1.50. Total premium was $3 million and if United States Oil Fund LP (ETF) trades at $14.50 at the May expiration the profit would reach $10 million. Nathan explained that it makes sense to use a spread when the implied volatility is as high as it currently is in United States Oil Fund LP (ETF).