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Picking an oil ETF
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Is USO a safe bet? Am I going to get rekt? Thanks guys.
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>>1047374
$WLL
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>>1047374

It's not a safe bet at all, and it has nothing to do with whether oil continues to fall.

USO will only be profitable if oil makes a significant move during the current month's contract. There is always price decay when the contract rolls over the next month. So USO will lose money in any period where:
-Oil goes down over any time frame
-Oil stays flat over any time period
-Oil goes up on a month-to-month basis by less than the difference between the prior month futures contract and the current month futures contract

USO is not "investing in oil". It's making a short term bet that oil will rise before the current futures contract expires.
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>>1047374
yolo all in UWTI
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>>1048415
Is there any reason not to? It has to go up oil isn't staying this low forever.
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>>1048415
>>1048472
By the time that shit recovers you'll be taking a 400% increase on an investment that has compounded down to $0.01

Going long on leveraged ETFs is a good way to get fucked. Especially when they're already in the shit.
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>>1048400
Do you have any sources to explain time decay as you did? I understand the concept, but have trouble understanding calculations for the rate of decay.
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uso is a terrible investment number 1 because of contango. Secondly there isnt value in just buying oil contracts unless you own an oil refinery. If you want to make money on low oil prices buy shell gazprom chevron or exxon. maybe even bp or some pipeline mlps but for christ sakes dont speculate on raw crude like a goy.
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>>1048497

Google contango and go from there

The math is pretty simple, though. If the February contract is 30.00, and the March contract is 30.50, then when USO has to roll it's contracts forward it sells Feb for 30 and buys March for 30.50. So now it has 1.67% less exposure to the spot price of oil.
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OP here, thank you guys for explaining why USO or other leveraged ETFs are a no go.
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