USO is suitable for short-term tactical buying due to technical support and low implied volatility, but its futures-based structure poses long-term risks if geopolitical tensions subside or the oil curve normalizes.

Okay, Don, let's see if you two agree and how you view the United States Oil Fund (USO) here. What are your expectations for this stock?

Well, first and foremost, I admire him. He takes the opposite stance. Remember something, KJ. I, as you know, am not wrong, I'm just often too early, aren't I? So, moving on to (USO).

As you know, I've been taking a broader look at oil lately, and one of the most notable things within the oil market is that it has begun to see some selling activity. I mean, this is just price performance, and this is what price usually does, right?

Some sales activities are taking place there. What really caught my attention in the oil market was the deviation in the options chain, or if you prefer, the absence of that deviation.

Now, for those who are not fluent in the jargon of "option experts," what I am specifically talking about with regard to divergence is that we are not currently pricing in what we call upside tail risk.

The market right now in oil seems to have almost no fear of a strong upward jump, which is something that, look, I could sit here and talk about the geopolitical risks that would be very obvious, you know, and are already obvious in the Middle East.

As for the elections, although the United States may not do anything between now and the elections, I think there are significant geopolitical risks; Because they in the Middle East realize that the United States is unlikely to take any action between now and the election date.

But putting all that aside, I don't see much upside bias in the oil market, and I really think trading here is very effectively priced in because of that, meaning traders aren't looking at oil and saying it might bounce strongly upwards. And I like this positioning.

Therefore, in the USO fund, I would choose option contracts that expire on October 30th. Not far off, October 30th. I will buy call options at an execution price of 148 and sell call options at an execution price of 153.

This transaction will be done at a discount of $1.80. What I am looking forward to is a swift return to the upside, and a rekindling of some of the implied volatility that seems to be missing at the moment.

The market right now is looking at oil with indifference, as if they are saying, "Well, everything will be fine." But if that's not the case, this deal could work very well.

Okay, KG. What do you see here? Because, as Don just pointed out, geopolitical risk concerns are still very much present. We even witnessed during the night the Saudi aviation authority announce that two airports had been attacked.

It is true that the price of West Texas Intermediate crude is still hovering below the 90 level, but what do you see for USO from a technical perspective?

True, from a technical point of view, this deal makes sense. I mean, Don looks at it and says, "There are potential tail risks on the left side." This would be a decline in the value of shares.

However, if you look at it from a technical perspective, on a daily chart over a year, this financial instrument has experienced consolidation followed by a breakout. Geopolitical risks clearly play a role in this.

We have seen well-defined channels created, especially upward channels. We already saw a downward break in July, which broke the higher tops and higher troughs hypothesis. We saw a slightly lower bottom on this chart, but it managed to recover and has now established itself in another upward channel.

We are approaching the support zone. In fact, we tested it yesterday, and you can see a slight bounce upwards. You could say, "Well, the USO fund might return to around the 153 level."

This is the level we saw on September 24th. This seems logical. However, the Relative Strength Index (RSI) is recording lower highs, and the MACD indicator is in a bearish formation.

However, if we move on to the next chart, I would like to highlight something about this investment fund. This fund is a mix of futures contracts, as well as swaps. Therefore, this fund has mostly outperformed crude oil.

This is why we actually see, on September 15, that USO is recording new relative highs in the cycle, while crude oil itself is not recording new highs. Thus, this fund was able to profit from the difference between futures contracts.

So, this represents a positive boost for the fund at the moment, but it could become a hindrance in the future if we see a lull in tensions, or if we start to see the crude oil curve return to normal.

The technical situation looks really good for Don. Tactical trading, or short-term trading, seems logical. But in the long run, USO may face some disadvantages or obstacles, given its structure.