You cant profit from oil with an ETF. If crude spiked or doubled today the ETF wouldn't even more just FYI.
IrvingAlexis
⋅
@DigitalData, Interesting thanks for sharing. Do you have any info you can share to understand this a little better?
syzygy1
⋅
@DigitalData, USO is not an ETF strictly speaking. They manage baskets of near term futures contracts. Or they did, anyway, until a few hours ago. Now they're apparently buying longer term contracts to fight supercontango and are liable to buy just about anything else.
finance.yahoo.com/news/5-things-know-buying-uso-192542447.html?.tsrc=rss
DigitalData
⋅
@syzygy1, by definition it is an ETF @IrvingAlexis . So essentially normal traders do not have exposure to oil right? Unless you're a broker for commodities. So USO attempts to stack futures back end and front ends to keep up in comparison with real thing. Which can work, but there is lag. Just pull up the two charts on the same timeframe to see what happens during large spikes of crude. Basically if Oil massive spikes, the ETF will barely move.. which isn't so bad, but when something like this happened everyone swapped to the ETF which by default would be going down since crude is
In simple terms... an ETF like trading indicators are lagging and smoother. However, there are inverse and leveraged ETFs (which you can make a small fortune on during a time like this)
The inverse x3 crude oil ETF is up 142% in 4 weeks lol
I guess stating the obvious an inverse leveraged ETF (short term) is say oil collapses or starts to the inverse drastically rises the further the fall the inverse goes up. However, you have to be careful inverses are ONLY short term use. Never stay in them long and make sure you watch the news.
syzygy1
⋅
@DigitalData, re: USO being an ETF or not, I was just reiterating the article I posted. Perhaps an arcane distinction. Personally I'd rather my exposure to oil come without a running countdown on my potential return. I also think the difference in price may have less to do with "lag" per se (though that's in the mix) than the possibility of funds trading at prices out of whack to their NAV, as is happening right now with USO as traders rush in to catch the very cheap knife.
DigitalData
⋅
@syzygy1, USO isn't even exposure, and by lagging it would have to be since it takes front + back end .. if it was just front end not so much lag in price possibly.. assuming crude was going only up.
The USO debacle isn't about anyone catching the knife... it's about ETFs getting wiped out for millions of people. There is already some super lawyers asking people to come forward with details. Basically there's a chance USO failed to mention certain things to investors as well.