Using the ETF for US Oil futures (USO) I have been able to play the oil market, and it was quite profitable for me in 2009. While I do not fundamentally agree with the idea of an "oil" ETF, as I have no plans to take delivery of any barrels of oil, it does offer a nice opportunity.
Last week I saw that USO was trading at around $34, for me a price point below $35 is always attractive.
I then looked into the options market to see what calls were selling for. I was able to sell October calls with a $36 strike for $2.25. This represented a 6.5% premium on my $34.20 buy price. Additionally I would get $1.80 of principle gain (another 5.2%). I decided 11.7% was an attractive options play for me in this 5-month window, especially with 6.5% up front.
Throughout 2009 I was able to used covered calls to earn premium up-front while holding USO. I found that by earning this premium I was able to more than cover the contango that exists in a futures based ETF. I hope to do the same thing again with this play.
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