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July 11, 2013  Thu 11:31 AM CT

USO: SEE CHART GET CHAIN FIND STRATEGIES
An unusual put spread tops today's option trading in the U.S. Oil Fund as it comes off 52-week highs reached yesterday.

optionMONSTER systems show that a trader bought 13,000 September 35 puts for $0.65 and sold 13,000 January 30 puts for $0.42. Volume at each strike was above open interest at each strike, so this is new positioning.

The trade, known as a diagonal spread, is similar to a regular bearish vertical spread but uses the sale of the longer-dated puts to further offset the cost and take advantage of the "skew," as those January 30 puts have a higher implied volatility. (See our Education section)

USO is off 0.96 percent to $37.07 this afternoon, down from yesterday's $37.64 peak. Shares were at a 22-week low of $30.79 in mid-April.

The fund's total option volume tops 95,000 already today, compared to a daily average of 59,420 in the last month. Puts outnumber calls by 6 to 1.
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