On March 9th, the international oil price soared sharply against the background of further escalation of the situation in the Middle East. The market's worries about the blockage of transportation in the Strait of Hormuz and the interruption of crude oil supply in the Middle East rose rapidly, pushing Brent crude oil to rise to $119.50/barrel once.$WTI Crude Oil Main 2604 (CLmain) $Simultaneous surge.
At the same time, Iraq's crude oil production has dropped sharply, and the G7 has also begun to discuss the joint release of emergency oil reserves, indicating that the current crude oil market has entered a stage of high risk and high volatility. Corresponding to USO, although the short-term trend is still strong, the price has risen significantly, the fluctuation has been sharply enlarged, and the cost-performance ratio of continuing to chase up has declined.
In this context, if it is judged that it is difficult to effectively break through the pressure range above $130-$135 before the expiration of USO, you can consider building a bear market bullish spread strategy of 130/135, and strive for profits by collecting premium while controlling upside risks.
USO Bear Call Spread Strategy
Strategic Structure
Investors in$U.S. Crude Oil ETF (USO) $Build a Bear Call Spread strategy on options.
This strategy is a bearish/shock strategy that collects premium, limited income and limited risk, and is suitable for judging the situation that it is difficult for USO to effectively break through the upper pressure area, maintain shock or drop slightly before expiration.
1 ️ ⃣ Sell Lower Strike Price Call (Main Source of Revenue)
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Sell 1 Call with strike price K₁ = $130
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Received premium = $2.53/share
The Call is closer to the current price and is a major source of revenue for Strategy premium.
As long as the expiration price is ≤ $130, the option lapses and the investor retains all premium rights.
2 ️ ⃣ Buy the higher strike price Call (control upside risk)
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Buy 1 Call with strike price K₂ = $135
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Paid premium = $1.89/share
This Call is used to limit the risk when USO rises sharply and avoid the risk of unlimited losses caused by naked selling calls.
3 ️ ⃣ Call-end net income (per share)
Net premium income was:
2.53 − 1.89= $0.64/share
This is the greatest available gain from the strategy.
Maximum Profit
When the USO expiry price is ≤ $130:
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Both calls are out of the money
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All options lapse
Investors retain all net premium:
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Maximum Profit (Per Share) = $0.64
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Per contract (100 shares) = $64
Occurrence conditions:
Expiry Price ≤ $130
Maximum loss
When USO expiry price ≥ $135:
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Both calls are in-price
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The strike spread is fully locked in
Calculation:
Strike spread:
135 − 130= $5
Maximum loss (per share):
Strike Spread − Net premium
=5 − 0.64= $4.36/share
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Maximum loss per contract = $436
Occurrence conditions:
Price at maturity ≥ $135
BREAK-EVEN POINT
Formula:
Sell Call Strike Price + Net premium
=130+0.64= $130.64
Maturity judgment:
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Price ≤130.64 → Earnings
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Price =130.64 → No Profit or Loss
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Price ≥130.64 → Loss
V. Strategy characteristics and applicable scenarios
Strategic characteristics
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Clear bearish/shock-looking strategy
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Collect premium Structure, Time Value Is Good For Investors
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The maximum gain and maximum loss are determined when the position is opened
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Upside risk is capped compared to naked selling Call
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Risk to return ratio is approximately 1:0.15 (Risk 4.36, Return 0.64)
Applicable Scenario
When investors judge:
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The USO has a clear pressure in the 130 – 135 range
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The probability of an effective breakthrough of 135 in the short term is low
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The upward momentum of crude oil-related assets slows down, and USO is more likely to fluctuate at a high level or fall slightly
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Or the implied volatility is high, which is suitable for constructing a closing premium structure
The structure is essentially:
"Use $4.36 risk to gain $0.64 income".
The winning percentage of the strategy relies on the judgment that "the price holds below 130 or at least does not effectively break 130.64"; If USO breaks through the pressure range rapidly, the loss will expand, but the maximum loss has been capped when the position is opened.
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