What's wrong with DUG?

Discussion in 'Trading' started by c.chugani, Jul 2, 2008.

  1. Oil hits a new high today and this double short ETF ends up +5.40%.

    Does this fund actually track oil? I find the correlation a bit off..

    Maybe its short covering? Or are the big players buying to build up a position for when the bubble goes pop?
  2. XOI was down 3.24% today, so DUG underperformed on the upside.

    Oil company stocks and the price of oil don't always move in the same direction. Same goes for copper, gold and silver stocks and the prices of copper, gold and silver.
  3. Ok so this "underperformance" is due to the tracking characteristics of the ETF on the underlying,

    and not because of supply & demand issues (ie. short covering or people building up positions in DUG).

  4. HUH? Oil company stocks? This is not an ETF with oil company stocks. It holds DJUSEN swaps (& cash) to simulate shorting the Dow Jones Oil & Gas index (times 2)

    Its up because people are loading up on it. Happend 3 weeks ago also on a Friday afternoon, oil was down the monday after.
  5. that was my original impression. The moves look more like a market supply/demand behaviour. It could also be the shorts covering their positions for the same reason (ie. if oil is going to retrace temporarily, they would want to close their short DUG positions).
  6. It does not work like that (shorts covering). I advise you read the prospectus (www.proshares.com)

    Even if oil is going down on a day, it can happen that you wake up and your DUG is down also. Its not a one day oil play. If you want to trade oil , its best to buy or short the USO or CL (futures).
  7. The Dow Jones Oil & Gas Index is based on the price of oil, natural gas, coal and energy service stocks, not the price of oil.

    The energy stocks got clobbered and DUG went up.
  8. You couldn't be more wrong.

    And just what do you think the Dow Jones Oil & Gas Index is my friend?



    Did you not see the carnage that was going on in the OIH yesterday afternoon?

    Key reversal from yesterday's 228 gap-up opening down to 207 this morning.
  9. S2007S


    If you want to short oil buy DTO, 2X ultrashort ETN that moves in the opposite direction of OIL, im adding my next position when oil is around 150+.
  10. I am not wrong on this one at all. Why don't you study this ETF before you reply. It does NOT hold any oil and gas stock at all. NONE.

    READ before you reply and look at the actual holdings of DUG. None of them are stocks.
    #10     Jul 3, 2008