Tags: OIL, USO, SCO, DTO; Oil ETFs
The meltdown in recent OPEC talks is leading to a breakdown in oil, despite stated thin capacities. Witness the breakdown in the oil etfs, OIL and USO (see chart below). The July 36 put on the USO is seeing a lot of action today (6.38k contracts) and is currently trading around a buck.
If you'd like to take advantage of this move in a retirement account and don't care to use options, check out the double inverse bear oil etfs, the DTO and the SCO. Both of these funds broke out today (SCO's chart is below). Average volume on the SCO is six times higher than that of the DTO (2.5M vs 400K). It does have options but the field isn't nearly as liquid as for the USO. (There are no options on the DTO.) Note that major support/resistance occur at the $10 levels; minor support/resistance levels are at the $5 marks.