Buy Alert: November 20, 2015

Buy Alert: November 20, 2015

 

Option Strategy:

Buy US Oil Fund $USO December 18, 2015 $13.50 calls for $0.55 or better.

 

Commodity Outlook: Crude Oil

No doubt about it, November has not been kind to WTI bulls.  On the December 2015 contract, the commodity sank from $48 a barrel earlier in the month down to $40.20 in recent trading.

But here’s the deal…

The 2015 low is just a stone’s throw away at $39 a barrel.  This important level of support offers a very promising risk/reward setup on the long side of the market.

Here’s how we capitalize on a potential bounce in crude…

 

Resource Trade: US Oil Fund $USO

With crude nearing the perfect price level for a technical bounce, it makes perfect sense to look to $USO.  As long time subscribers are aware, the crude tracking ETF trades in lockstep with the price of WTI.

So here’s what we’ll do…

Buy the $USO December 18, 2015 $13.50 calls for $0.55 or better.

The current bid/ask spread for this contract is $0.46/$0.47.

Do not pay more than $0.55!

Our official entry price for performance tracking is $0.47.  Your price may be higher or lower.

Exit Strategy:

Remember, we want $USO to trade higher.  Our first profit target is $14.25 while our second target is at $15.00.

I am giving this trade very little room for error, as our risk control line is $12.60.

If $USO trades below that level, conservative investors should consider closing this trade to preserve capital.

Until next time,

Justin Bennett

***Editor’s Note***  Please be sure to read the new free report posted to the member’s only section of the Commodity Trading Research website.  This valuable report focuses on trade management techniques specifically designed for the style of trading we do in the Options Profit Pipeline.

Category: Commodity Trading