Opened UCO covered put (7/29 expiration, $9.50 strike)
Sold to open 2,000 shares of UCO for $9.79, and sold to open 20 put contracts with $9.50 strike price expiring 7/29 for 25¢. Total proceeds after commission are $20,049.10, or $10.02/share.
- The ETFs are both levered and suffer decay. In the long run, both of them will decline, regardless what happens with crude oil.
- Since both ETFs are very volatile, there’s significant implied volatility, which I am attempting to harvest, here.
The basic idea is to be always short at least one of the two, and where the future path of oil becomes very difficult to predict, both.