As we wrote yesterday U.S. Bancorp (USB) appeared to be dramatically overbought so we ventured out of our precious metals bunker and purchased a few PUTS on USB. We bought the September 2009 series with a strike price of $22.50 for $1.00 per contract (UEEUX).

As one of our readers commented its nice to ’short the enemy’ even though we are precious metals bugs.

As we can see from the above chart the RSI is well above the ‘70′ level which usually indicates that a correction is nigh. This bank has also gained in value by about 50% over the last month or so rising from $16.50 to $23.42 which has been a terrific run. However, it is a very steep climb and could be too far too fast for USB, thus tempting those investors with profits to lock them in.

Anyway we will keep a close eye on the action and formulate an exit strategy shortly. We normally hope to make a 100% on a trade so we may well place a sell order at that level while we are chewing on it.

US Bancorp has a market capitalization of $44.01 billion with 1.91 billion shares outstanding, a P/E ratio of 27.98 and closed down $0.23 today at $23.02. US Bancorp trades on the NYSE under the symbol of USB.

Your thoughts are of course most welcome.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector that is currently coming back to life, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.