When I watch the oil future chart, I find USO has such large time decay. For example, if you buy 1 oil future at oct/31/2008(price was 69), then buy 1 future at the end of each month until june/31/2009(price was 75), you can earn a lot even if you count the spread between months. But if you buy 1 uso at oct/31/2008(price was 55), then buy 1 uso at the end of each month until june/31/2009, you may loss money or only earn little, because the price at that time was 40. Let's say the spread of oil future between months at that time was 1, (currently the spread is 0.6), we hold 8 months, so we pay 8*1, the selling price was 75, so we can get 75-8 = 67. That means we pay 69, and we can get back 67(75-8). But for USO, we buy at 55, we sell only at 40. What's wrong? Can anyone tell me if it is true that it takes me over 30% my money as cost to hold USO for 8 months?
Not sure if you can call it time decay. USO only holds near month contracts, which is rolled over monthly on a specific date which equates to high monthly rollover fee's during contango, which add up. USO is subject to contango and backwardation. [contango vs backwardation] What will it cost to hold for 8-months? How long will WTI remain in contango? Neither question is easily answered. Article on how current contango hurts USO and how backwardation benefits USO