Since oil related stocks are volatile & depend upon the crude oil price on a given day, a good way to hedge your position would be to day trade (short or long) the Oil Holders Trust ETF (NYSEARCA:OIH), currently trading on the Amex for $137.
How this works:
* OIH is one of most volatile of the energy ETFs, so it can provide you with excellent trading opportunities. Personally, I like to day trade OIH, because it has $3+ price swings up or down depending on the crude prices.
* If you want to day trade OIH, what I normally do is, I check the price of oil in Asian & European markets to see where crude oil is. OIH trades in pre market hours, so I monitor its movements, and during the first 30 minutes depending on the momentum in crude oil stocks, I take a short or long position depending on which way the market is headed for OIH that day.
* OIH has got good volume and is a basket of stellar stocks, all which don't matter in the short-term trading time because OIH's price is so heavily dependant on whether crude is going up or down for that day.
OIH 1-yr chart: