Novice Trade: United States Oil Fund

The Trade: Buy 1 USO July 9 call for a 1.00 debit.    United States Oil Fund (USO) , the oil ETF most likely known to many traders by now, has spent the last 52 weeks trading between $9.23 and $12.25. That rather tight range for a one-year period for the trading of oil is quite unusual. But things change, and maybe that change is a positive for the price of oil.   If you read the financial headlines you know that the price of oil has been under pressure over the past month. One month ago USO was trading above $11. Today the value of USO value is more than 10% lower. But, things change, and maybe ...   Typically the price of oil rises as the yearly calendar moves into late spring and early summer. That rise is due to the demand for oil picking up as better weather in the U.S. and Europe catalyzes the desire for travel, which pushes up the demand for oil.    Any oil price rise that soon might occur is not factored into today's price of oil. And in that potential for an increase in demand for oil over the next several months lies the basis for this trade.   Technically I read USO's one-year stochastic and relative strength index (RSI) as being in bullish trends with further upside potential.    The trade tactic I prefer now for USO is the long call "shooter" set-up. This tactic is for highly discretionary capital only and should be considered being of very high risk. Of course, that being the case, this trade has decent reward potential, too.   The trade is as follows: Buy 1 USO July 9 call for a 1.00-point debit. The suggested target to close for a gain is bid of 1.50 points and the suggested target to stop-out the trade is a bid of 50 cents. Best to scale into the position using limit orders.
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