Explaining the USO ETF

Discussion in 'ETFs' started by thyrus, Apr 21, 2020.

  1. Nobert

    Nobert

    Damn, always thought it's made out of oil related equities. While in reality , just another one of those - don't touch it because it has ,,best till'' on it.
    Normandy beach
    for noobs, unless one really knows what to do.

    It is sorta misleading ;
    placing something made out of equities and then, something made out of the futures, under the same word of ETF.
    (,,woah, something misleading in financial industry - as if that never happened before'')

     
    Last edited: Apr 21, 2020
    #11     Apr 21, 2020
  2. Hot off the press, creations by AP's in USO have been suspended.

    GAT
     
    #12     Apr 21, 2020
  3. source?

    edit - ok post is misleading, this wasn't some arbitrary decision. fund simply reached max size
     
    #13     Apr 21, 2020
  4. schizo

    schizo

    FYI USO is not suspending the entire operation, but stopped selling new shares.
     
    #14     Apr 21, 2020
  5. schizo

    schizo

    Not sure I understood your question, but USO will keep rolling over every month in tandem with the crude futures. You will end up paying for the rollover, though. However, you can bail out of your position anytime, just like a stock.

    As for USO going belly up, nobody knows. If June contract dips below zero before expiration, there's a good chance that USO could go up in flames. But, again, nobody knows. We've never seen the crude oil trade in the negative territory before.
     
    #15     Apr 21, 2020
  6. narafa

    narafa

    All depends on the ETF manager. It can reverse split, it can change it's multiplier (To be 0.5x instead of 1x), they can decide to shut it down (Although this is highly unlikely, since they are experiencing large capital inflows recently).

    Beware, the large contango in WTI futures is a strong headwind for USO price. So USO prices not only need a strong rally in WTI oil futures prices, but also a sustained one, typically lowering the contango. It's very difficult to achieve in this situation.
     
    #16     Apr 21, 2020
  7. trader99

    trader99

    USO is not a good direct exposure to oil. UCO is more direct but also risky as well since it'x 2x. SCO is 2x bear oil etf.
     
    #17     Apr 22, 2020