Bulls Blast USO as Oil Prices Spike

USO calls are running four times as quick as puts

Options volume is accelerated on the United States Oil Fund (USO) this afternoon, as the exchange-traded fund (ETF) moves higher with oil prices. Specifically, escalating tensions between U.S. and Iran had February oil futures closing up 3.1% at $63.05 per barrel, and USO shares are 3% higher at $13.19 -- trading above long-term resistance near $13.

In the options pits, nearly 129,000 calls have changed hands -- six times what's typically seen at this point, and quadruple the number of puts on the tape. The weekly 1/10 and January 2020 13.50-strike calls are most active, and it looks like new positions are being purchased. In this case, call buyers are betting on USO breaking out above $13.50 over the next two weeks.

Options traders have already been targeting the front-month 13.50 strike, which is currently home to 25,321 calls outstanding. The January 2020 13-strike call is home to peak call open interest on USO, where nearly 53,000 contracts reside.

USO shareshaven't closed a week above $13.50 since October 2018, but earlier traded as high as $13.32. The fund has gained roughly 24% since its Oct. 3 low at $10.64. Today's pop puts the shares on track for a fifth straight weekly win, the longest such streak since April.