NEW DIRECTIONAL CALL PLAYS

U.S. Oil ETF - USO - close: 29.46 change: -1.03

Stop Loss: 28.49
Target(s): 33.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The sell-off in oil is getting overdone. Oil has been collapsing over the last several weeks thanks to a parade of weak economic data from around the world. Investors are concerned that a global slowdown will mean less demand for oil (& fuel). Now the USO is nearing its 2011 lows near $29.00.

Make no mistake, this is an aggressive trade since we're trying to call a short-term bottom in oil prices here. The commodity could definitely see some strength as we get closer to the EU oil embargo against Iran, which is scheduled to start on July 1st.

I am suggesting we buy calls at the open tomorrow morning. We'll start with a stop loss at $28.49 just in case the USO does pierce the 2011 low ($29.10). Our multi-week target is $33.00.

- Suggested Positions -

buy the Jul $30 call (USO1221G30) current ask $0.89

- or -

buy the Aug $30 call (USO1218H30) current ask $1.36

Annotated Chart:

Entry on June xx at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 8.6 million
Listed on June 21, 2012