I hold 200 USO July 11$ Calls, like many out there trying to make a buck on any bounce in oil. I have since learned this trade is worthless with USO losing money hand over fist.

I was confused however to the reaction the day of the split. The night before these had a value of around $700 but on the open these quickly went hard offered at 0.5, basically worthless.

So these are now 88$ Calls? These have 70k open interest and now have zero delta. If something happens and oil prices rocket to 50$ overnight these are still worthless?

There is nothing I can do with the position and I accept the stupidity of my long shot gamble but I would like to know how that money vanishes overnight and what happens if the market ramps ups again.

Thank you

  • 2
    200 calls would make the call premium 3-1/2 cents per contract. The OP's valuation may have been based on last trade or closing price. The bid should be close to if not zero. Apr 30, 2020 at 13:55
  • 1
    Splits themselves do not impact option value. USO was ~$2.13 prior to the split. Your $11 calls on a $2.13 fund are now $88 calls on a $17 fund (for 1/8 the # of shares). Both are equally worthless.
    – D Stanley
    Apr 30, 2020 at 14:14
  • Yes these were pricing around 3/3.5 cents. 200*0.03*100 so $600, even with vol through the roof I do not agree they should be worth that. It was more that my p n l marked down instantly to near zero on these the next day. Thank you for your answers, I now own 88$ calls for July. A useless position but a position none the less. Apr 30, 2020 at 14:57
  • When you say that they were pricing around 3/3.5 cents, was that the bid price? Right now the quote is 0.00x0.01 so if your broker values them properly, the value is zero. If your broker averages the B/A then they would be valued at 1/2 a cent. Implied volatility valuation is fairly worthless with near zero options so far OTM. Apr 30, 2020 at 15:55


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