USO Options Trading — Covered Calls, Puts & the Wheel
A complete guide to selling options on United States Oil Fund. Expected premiums, strike selection, real example trades, and the four strategies that actually work for USO.
Why trade options on USO?
USO (United States Oil Fund) is one of the most heavily traded ETFs for options strategies. Penny-wide bid/ask spreads and deep open interest on every strike make it ideal for premium sellers. Because USO is a basket rather than a single name, single-stock earnings risk is diffused, which is a meaningful edge for consistent income.
Typical monthly premium collected on USO runs around 2.0-3.5% of capital, which annualizes to roughly 24-42% if you sell new contracts every cycle. Capital required to run a single contract wheel on USO is under $5,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Four strategies that work on USO
USO Covered Call
Sell upside calls against 100 shares you already own to collect premium every month while capping your upside.
Read the USO Covered Call guide →USO Cash-Secured Put
Sell a put backed by cash so you either get paid to wait or acquire the stock at a discount to today's price.
Read the USO Cash-Secured Put guide →USO Wheel
Alternate between cash-secured puts and covered calls on the same ticker to generate continuous premium income.
Read the USO Wheel guide →USO Poor Man's Covered Call
Replace the 100 shares with a long-dated deep-ITM LEAPS call and sell short-dated calls against it to reduce capital.
Read the USO Poor Man's Covered Call guide →USO options FAQ
What is the best strike price for a USO covered call?
On USO, target 8-12% out of the money at 0.15-0.25 delta. On a high-volatility stock like this, closer-to-the-money strikes chase premium but spike assignment probability to uncomfortable levels.
How much premium can I collect selling calls on USO?
Typical monthly premium on USO is 2.0-3.5% of position value, annualizing to 24-42% when you roll every cycle. Earnings months can pay 2-3x the normal rate because of elevated IV.
What is the best delta for a USO cash-secured put?
A delta of 0.15-0.25 on USO balances premium income with assignment probability. Many traders anchor to 0.20 delta as a starting point and adjust based on their willingness to own shares.
How much cash do I need to sell a put on USO?
Cash required is 100 × strike price. For USO, that's roughly under $5,000 per contract at a typical strike. Most brokers let you use margin, but for a true cash-secured put you set aside the full amount.
Is USO a good stock for the wheel strategy?
USO is excellent for the wheel because of its penny-wide spreads and elevated IV (high premium, higher assignment risk). No dividend means all your return comes from premiums and price appreciation.
Can you run a poor man's covered call on USO?
Yes. Buy a 0.80+ delta LEAPS on USO dated 12-18 months out as your synthetic long, then sell short-dated calls 8-12% above the stock at 0.15-0.25 delta. Capital tied up drops from under $5,000 to roughly 30-50% of that — a meaningful improvement when the share price is a low share price.
What expiration should I use for USO options strategy trades?
Use 21-35 DTE to capture IV without excess gamma risk as a default for USO. This window captures the steepest part of the theta curve without excess gamma risk.
Is USO suitable for beginners selling options?
Mostly yes, though beginners should use small size and confirm liquidity on each expiration they trade.
Run the numbers on USO yourself
Use the free OptionsPilot calculator to price covered calls and cash-secured puts on USO with live quotes.
Open the USO Strike Finder →