Covered Call Part 2: Analysis
The play I am going to make for the covered call will be a play on crude oil through the United States Oil ETF (USO). The justification for this play is purely technical as is indicated from th chart below we recently crossed an area that finished the formation of a nice cup with handle pattern. Fundamentally I do not have faith in this market and I believe if we retrace to our lows that oil will follow. So even though I am modestly bearish I am going to write the covered call on USO because I feel we can still stay within a range here with oil and could be good neutral play on selling the premiums here. Ideally we would see a pullback to the line drawn to indicate a support level has been made before executing, however I will move forward without the confirmation.
Note: This is not a clean breakout so the support line may prove to be resistance. Something to keep an eye on.
USO - Cup with Handle Pattern
