oldtime
Registered: Jun 2011
Posts: 7479 |
03-05-12 11:24 AM
Quote from FrankSlaughtery:
USO is like UNG but not nearly as bad. over long periods of time spot CL and USO do NOT track closely. the correlation might be high but the performance might not be (e.g. correlation 0.90 but USO goes up 10% and CL is up 30%).
long story short there is no way around the inherent issues such as contango, backwardation, etc. some people say "just buy longer dated futs to avoid contango" - well the futs by definition incorporate this higher price so you need spot to go ABOVE the future price - not the spot - to make money.
anyways USO is good for a short term trade at best (intraday to under 5 days) to trade the % change in spot CL but over longer periods of time you're prob going to be disappointed.
I agree, the point I was making is unless your position is at least 50k, the short term percentage isn't going to make much of a difference, and if you have 50k to commit you'd be better off just trading the futures.
otherwise, one of the things that got me back into trading was I wanted to get long energy, but I never could figure out a good way to do it. Don't have enough money to just go long CL, and then like USO is discovering, you can get killed on the roll. Options are good if it is moving, but you know how that goes, and very difficult to make money in commodities if it is just a cash position.
GLD is a little different, because it is actually backed up by bullion, but I know of no ETF that actually owns the oil. (also, a little easier to store gold than oil, even if it is just a piece of paper.)
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