Long USO into Summer

Discussion in 'ETFs' started by lpchad, Apr 17, 2009.

  1. lpchad


    Anyone else getting long USO ahead of the summer driving and hurricane season? Seems we can only stay around these levels or go up from here.

    This trend repeats itself yearly.

  2. I picked up a couple USO Jan 2011 (OTJAO.X) 15 Calls last month.
    Going to sit on them as a speculative play, or sell some calls off of them mid summer.
  3. piezoe


    Yes, of course. You want to be long here.
  4. does anyone have a chart of sweet or crude oil during the summer months for the past 10 years ?
  5. http://online.wsj.com/article/SB124087948984561797.html

    "As unemployment rises and discretionary income shrinks, millions fewer Americans are driving. For commuters, that means some of the worst bottlenecks in the country are easing. Americans drove 8.6 billion fewer miles in January and February than during the same months in 2008, according to the U.S. Department of Transportation. Mileage has been declining since the end of 2007."
  6. After talking with a trader that I highly respect, I would recommend that you look into another product to express your trade idea. I haven't researched it for myself because I'm not interested in a long-term USO hold. Apparently the manner in which the product is structured is flawed.

    (This isn't exactly what he said -- we talked about it weeks ago b/c he decided to close out the trade for a loss and he told me why he decided to so ) So, for awhile [maybe it still is] the oil market was in contango (contango - the price of a commodity for future delivery is higher than the spot price). He told me that the way in which USO is structured is that they purchase front-month contracts and some how or another that is how USO is priced -- therein lies the flaw.

    It made a lot of sense when he explained it, but he did the research on his trade. You should do the same. Good luck.
  7. Go long oil and energy companies when various countries are having a hard time finding area to place new crude deliveries?

    I don't think so.
  8. Wasn't there a report this week about the "record amount of oil in storage"?

    Maybe it shouldn't be even $50?
  9. Exactly. I know I'm a noob at this stuff, so maybe my opinion doesn't float for much. But it would seem that USO isn't a good play for the next 6 months or even beyond at this point.

    If you want to hold something energy related into the summer, try GAS (UGA). Since gasoline usually sees a rise towards the summer months and more Americans will be taking their vacations within driving distance than ever before - assuming they take vacations.
  10. plan


    I'm with you on the USO but how about that contango problem, has that eased?
    #10     May 2, 2009