Oil ETF in Focus as Iran-U.S. Tensions Simmer

As Wall Street churned mid-week, word starting trickling out that the U.S.' negotiations w Iran were faltering, and that military movement indicated conflict was imminent. This has sent oil prices surging; black gold is up 6% this week already, bringing its year-to-date gain to 16%. Naturally, United States Oil Fund (USO) is also buzzing, with options traders honing in on the ETF.

USO was last seen up 2% to trade at $81.02, trading at its highest level since late July. The ETF has staged a nice little bounce off $68 since the start of the year, thanks in large part to a 6% rise so far this week, which also pushed it into positive territory year over year. 

Calls have been the preference among options traders. USO's 50-day call/put volume ratio of 2.00 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 99th percentile of its annual range. Echoing this, the ETF's Schaeffer's put/call open interest ratio (SOIR) of 0.46 stands in the 9th percentile of its annual range.

Digging deeper, the weekly 3/4 90-strike call is the top trade right now, while the 80 strike in the standard March series is also popular, per Trade-Alert. And with a Schaeffer's Volatility Scorecard (SVS) of 11 out of 100, the security has consistently realized lower volatility than its options have priced in, so a premium-selling strategy could be the move.