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Dr. Kris hails from the land o' lakes, beer, bratwurst, and Bucky Badger. She traded in her cheese hat for a propeller beanie and has never looked back. She has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her... More
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  • A few quick ways to play the breakdown in oil  4 comments
    Jun 17, 2011 3:41 PM | about stocks: USO, OIL, SCO, DTO

    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.



    FYI: The slump in oil prices is buoying the Dow Transports and the airline stocks.

    Themes: Oil, Transports, Airlines Stocks: USO, OIL, SCO, DTO
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  •  
    I am targeting 55 on oil, by november (light sweet crude, futures)
    17 Jun 2011, 05:24 PM Reply Like
  •  
    anything can happen but it may be a bit late to go into a double inverse bear etf. double inverse oil etfs are for short term trades only.I REPEAT: FOR SHORT TERM TRADES ONLY You do not want to hold these any longer than you have to. I trade the 2x crude oil futures with HOU.to. (a similar Canadian version of UCO ). If it gets a bit more oversold I will be looking to buy.
    21 Jun 2011, 01:53 AM Reply Like
  •  
    You're right about that. Inverse ETFs (even the regular ones) are for short-term trades only. Thanks for making the point.

    Dr. K
    21 Jun 2011, 10:35 PM Reply Like
  •  
    Watch out for a sudden pop in OIL in the next week or two, then it drops into Sept.
    www.oss.cc/oss_FreeSer...
    3 Jul 2011, 09:53 PM Reply Like
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