How Options Are Playing Oil Drop Now

Crude oil is nose-diving Monday, but the call buyers have moved in on the drop.

The U.S. Oil Fund ETF is down more than 7 percent today to trade at $27.37 as of this writing. The drop mirrors the fall in the commodity itself, but while the actual futures remain within the recent range, the USO exchange traded fund is now down to its lowest levels since March 16.

The futures are 45 percent off of the February low, while the USO is only 20 percent higher than its low.

In the midst of this drop, OptionMonster's tracking systems are showing heavy action in the July 28 calls, where more than 16,000 contracts have changed hands, the majority of them purchased even as the price has dropped from $2.90 to $2.65. The open interest at that strike is just 2,699 contracts, indicating fresh opening positions.

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Chris McKhann is an analyst and writer for OptionMonster.