USO Follow Up

We opened this position on Monday, Trade Idea: USO / Oil (short) and added to it Tuesday, Trade Idea: Adding to USO July 17th $20 Put and I'll show you why beyond the theme of USO pulling back in to its base to finish that up...

The P/L...

With a cost basis of $.74 and a fill of $1.07, the P/L comes to +45% for the July 17th puts.

This 15 min 3C chart of USO shows there's still significant downside in USO, however the gap from yesterday looks a bit bothersome very short term.

The reason for adding to the initial position is that when we see these head fake moves (orange) below a channel or above a channel, they cause traders to be left holding the bag and they tend to create high momentum moves. Both the move up and move down are higher volatility than anything that bounced within the channel. This is sort of like the Channel Buster concept, but in miniature.

I'll be setting alerts and looking for a new entry, but with a +45% gain for 3 days of exposure and plenty of time on the puts should it be needed, in other words a quality option still with a decent gain in 3-days.