[Marklar]

http://www.marketwatch.com/News/Story/S ... iteid=yhoo

An ETF, like DBC, but tracks WTI only. Planned launch is apparently monday

Keep an eye out for ticker USO

[grabby]

Very interesting:

They have found a way to make the movers and shakers in america to CHEER as gas prices go UP.

This should allow higher prices without too many heads rolling.

[MrBill]

Thanks for the heads up. By the way, looked at a product today called, an Oil Field, by UBS. The construction is interesting. You constantly sell the front month future, while buying the 5 year future and as it matures you can synthesize a physical position. However, without all the margin calls as if you did it via futures. Not such a bad concept. Would not want to pay UBS for the privilege though if I might re create it myself, so will have to tear it apart and see how it ticks?

[DantesPeak]

Thanks. Looks like the silver ETF and the oil ETF will arrive shortly in the US - both about the same time.

There is also something similar to this already in Britain already, but I haven't heard much about it here.

BTW - for US investors, these types of commodity funds are treated as commodities for tax purposes.

If the oil ETF becomes popular, DOE weekly inventory reports may start to reflect accumulations of oil by the ETF.

[teemu]

$this->bbcode_second_pass_quote('Marklar', 'h')ttp://www.marketwatch.com/News/Story/Story.aspx?guid=%7B5AF466F0%2D7629%2D47C1%2DA21E%2D0969CAFB1498%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

An ETF, like DBC, but tracks WTI only. Planned launch is apparently monday

Keep an eye out for ticker USO

[Marklar]

well excuse my narrowminded americaness...... the first *US* Oil ETF

[MOCKBA]

I will be going long with the ETF when either WTI would be at a discount to Brent or it would be bellow 50 day MA (which is what around 61 right now?). I don't have guts (or time) for futures, but ETF would work for me exactly as they market it - easy and cheap way to get exposure. It is a pity they didn't list it a month earlier - March was a great month to establish lazy long position on WTI at close to $60. If WTI would break $70 before summer, for my guts (or objectives) the ETF would be too risky.

Silver ETF I would short above $10. If gold would break $600 before summer, I would be short on gold ETF as well to about $540-$550 levels.

Overall, commodity ETFs are very risky proposition and I would rather trade spreads on index ETFs. But hey, it is fun - I never traded commodities.

[pb_2_au]

USO will be my personal strategic oil reserve. I like to keep an eye on the weather, so any incling I get of a major storm hitting a sensitive area I can stock up on my oil, I read the news in detail daily ... so likewise for flare ups in Nigeria or the ME.

To be honest, anyone with cash laying around and their ear to the ground is having an easier and easier time making and preserving their money with all these diversification tools at their disposal these days.

[joewp]

According to a news alert just now on CNBC, that is.

Sorry, no link yet. Still looking.

[joewp]

After delay, first oil ETF launch seen Monday

$this->bbcode_second_pass_quote('', 'B')OSTON (MarketWatch) -- The first exchange-traded fund tracking crude-oil prices is expected to begin trading Monday on the American Stock Exchange, according to news reports. Late Friday, the American Stock Exchange and the oil ETF's sponsor, Victoria Bay Asset Management LLC, sent out invitations to journalists for the bell-ringing ceremony Monday for the launch of United States Oil Fund LP, which will trade under the ticker "USO." Press reports had pegged the launch to take place this week, but it may have been delayed while regulators gave the final go-ahead.

[zberry]

Someone correct me if I'm wrong, but doesn't this seem like the no-brainer investment of a lifetime? My god. I know it's tied to the futures, but how can this possibly lose you money over the long term, assuming you buy and hold?

[Typhoon]

$this->bbcode_second_pass_quote('zberry', 'S')omeone correct me if I'm wrong, but doesn't this seem like the no-brainer investment of a lifetime? My god. I know it's tied to the futures, but how can this possibly lose you money over the long term, assuming you buy and hold?

[zberry]

$this->bbcode_second_pass_quote('', 'T')he best way for a confident peak oiler to make money would be to buy an out-of-the-money call option on a crude futures contract that expires on a distant expiration date. A call option gives you the right to buy the futures contract at the strike price. For example, the December 2009 $100 call option is going for about $2.50. This means that, for a maximum risk of $2.50 per barrel, you can capture all of the potential price appreciation above $100. Your breakeven point would be $102.50. Let's say that crude rises to $200 by the expiration date. The option you bought for $2.50 would be worth $100 (the difference between the strike price and the price of crude at the expiration date). In other words, you made a return of 40 times your initial investment while only risking a very small amount. Crude futures are 1,000 barrels each, meaning that each option you buy would cost $2,500 and would yield $100,000 if crude gets to $200 per barrel.

[rogerhb]

What is there stop more claims being sold than actually exist in terms of real oil?

[joewp]

$this->bbcode_second_pass_quote('rogerhb', 'W')hat is there stop more claims being sold than actually exist in terms of real oil?

[highfructose]

$this->bbcode_second_pass_quote('', 'I')n a way, though, I feel like I have a can't miss investment strategy going forward now:
Buy Gold on pullbacks
Buy Silver on pullbacks
Buy USO on pullbacks

[cudabachi]

I was going to post this story as an update to a thread I started last week about this ETF, but I couldn't access this site. Thanks for the new thread Joe!

Personally, I love the idea of this new ETF. More than 50% of my funds are invested in oil exploration, production, and service-related ETF's.

The concern I've had in the back of my mind though, especially in the service-related ETF's like OIH and PXJ, is that I believe at some point, these companies might actually begin to suffer as Peak Oil really sets in. For example, I could foresee that companies whose services are geared to exploration might actualy see a reduced need for their services as the producers shift gears and try to extract more of what's already been found instead of spending money on questionable exploration projects.

On top of that, there's also the fact that even companies operating in strong markets like today's energy market, can still be mismanaged and lose money at the end of the day.

As for an investment strategy with this particular ETF, what would be wrong with something of a dollar-cost-averaging strategy? If you really believe that over the long haul the direction of the price will be up, then it would seem that a monthly investment program complimented with some buying on significant drops would work for just about anyone.

I love the pure oil play nature of this one. I plan to move money out of one of my oil service ETF's on strong moves up and hold the cash to buy USO on down days.

[Daculling]

$this->bbcode_second_pass_quote('Typhoon', 'T')he best way for a confident peak oiler to make money would be to buy an out-of-the-money call option on a crude futures contract that expires on a distant expiration date. A call option gives you the right to buy the futures contract at the strike price. For example, the December 2009 $100 call option is going for about $2.50. This means that, for a maximum risk of $2.50 per barrel, you can capture all of the potential price appreciation above $100. Your breakeven point would be $102.50. Let's say that crude rises to $200 by the expiration date. The option you bought for $2.50 would be worth $100 (the difference between the strike price and the price of crude at the expiration date). In other words, you made a return of 40 times your initial investment while only risking a very small amount. Crude futures are 1,000 barrels each, meaning that each option you buy would cost $2,500 and would yield $100,000 if crude gets to $200 per barrel.

[DantesPeak]

Apparently a final SEC registration statement on April 4 needed some minor revisions. So another amended one was filed today. Since the company stated it will open for trading Monday morning, I assume the amended final registration was approved by the SEC.

Prospectus here:
SEC Prospectus

I think many are underestimating the effect of the oil ETF. When we hear about weekly oil inventories, the total amount sounds impressive. But in terms of value as compared to the $ trillions in investment funds, the total amount of oil inventories is only about the value of the 50th largest company by stock value.

While I strongly suggest not to buy futures/options in the event of unanticipated events, buying the oil ETF with the 50% stock margin is not too risky. Run, do not walk, to your stock broker before oil is on the high side of $100.

Dollar cost averaging is also not a bad idea.

The biggest downside to the oil ETF is that you do not own the physical oil, but only oil contracts. So in the unlikely event of a market shutdown, you may not be able to buy or sell the ETF.

[Typhoon]

EDIT: Decided to delete my post. It was a long post about the details of options...a bit off-topic from the oil ETF.