Quote Originally Posted by verminaard View Post
I'll ask a (hopefully) easier question. When USO plummeted down I bought some USO calls for January 2021, that are at a small profit right now (breakeven is at ~$27). Anyone have any thoughts whether I should just close the position now, or let it ride out?

Anyone have any thoughts what price USO is going to be at by next January?
CLOSE IT CLOSE IT CLOSE IT!!!!

those ETFs are garbage...you should read the USO prospectus...I believe that what they do is roll from front to second month contracts and keep the cycle going...

so in a really simple world lets say they held 1 contract at $100 per barrel in the front month and the second month contract was at $200...then when the time came to roll from front to second when the front futures expired they would only be able to by 0.5 contracts...and on and on and on and on...this negative roll yield keeps fucking with the price of the ETF (making it go lower), that's why it will never truly mirror the price of oil in the long-term...on a day-to-day basis I think it does a decent job, but as buy and hold it's AIDS...

I looked at this with the VXX...it's only great to "own" it for "long-term" when the back end is trading at a discount to the front end...

feel free to double check me on my factoids above, but if memory serves im at least on the right track...