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Bulls Blast USO as Oil Prices Spike

Karee Venema

Options volume is accelerated on the United States Oil Fund (USO) this afternoon, as the exchange-traded fund (ETF) moves higher with oil prices. Specifically, escalating tensions between U.S. and Iran had February oil futures closing up 3.1% at $63.05 per barrel, and USO shares are 3% higher at $13.19 -- trading above long-term resistance near $13.

In the options pits, nearly 129,000 calls have changed hands -- six times what's typically seen at this point, and quadruple the number of puts on the tape. The weekly 1/10 and January 2020 13.50-strike calls are most active, and it looks like new positions are being purchased. In this case, call buyers are betting on USO breaking out above $13.50 over the next two weeks.

Options traders have already been targeting the front-month 13.50 strike, which is currently home to 25,321 calls outstanding. The January 2020 13-strike call is home to peak call open interest on USO, where nearly 53,000 contracts reside.

USO shares haven't closed a week above $13.50 since October 2018, but earlier traded as high as $13.32. The fund has gained roughly 24% since its Oct. 3 low at $10.64. Today's pop puts the shares on track for a fifth straight weekly win, the longest such streak since April.

uso daily chart jan 3