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Bob (ID: !afC22hN8ng)
Oil ETN Holding Costs? 2016-11-03 14:38:57 Post No. 1599468
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Oil ETN Holding Costs? 2016-11-03 14:38:57 Post No. 1599468
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I never invested in oil, but the crazy low prices seen compared to the last months highs seem interesting. Market is going down like hell so might as well reap some low priced deals.
This particular paragraph worries me about holding costs though. What are they? Is there any cost to hold UWTI stocks for let's say a month?
Discuss.
> When looking at UWTI, investors must focus on the outlook for crude over the next several months and the holding costs they will incur from the trade. When the index is rising, UWTI is a great vehicle. However, as shown by the past year's results, when crude oil is in a decline, UWTI is likely to lose higher than 90% of its value in a very short period of time. Always perform due diligence before investing in leveraged funds.
http://www.investopedia.com/articles/markets/011516/uwti-cant-go-zero-here-why-uwti.asp
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>>1599468
Why not invest in oil stocks?
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>>1599471
UWTI/DWTI/USO ETNs are all oil stocks.
> VelocityShares 3x Long Crude Oil
> What's UWTI?
> UWTI is an exchange-traded note (ETN) that tracks a subset of the S&P Goldman Sachs Commodity Index, which only includes front month futures contracts on WTI crude oil. UWTI provides three times the exposure of its tracking index over one trading day.
AFAIK it's like buying ETFs for a certain sector, kinda.
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Anyone? Is this board filled with clueless motherfuckers or what?
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>>1599468
You don't hold UWTI, faggot.
I traded DWTI last November and rode the gains from like $90 to $420+. That shit isn't happening anymore, people realize that the price of oil at this point is a fucking meme and OP is going to get laid sooner than we see $60/bbl again.
Don't buy UWTI.
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I bought some BNE.
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Oil isn't recovering this time
Atleast never back to the $110 a barrel days when i used to get paid to drill for it.
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>>1599468
Look, last time oil fell sharply in price (in the 80's) the price stayed low for more than 10 years.
There are SO many factors that drive down oil that even if you have war in the Middle East again, you would only see a maybe 10$/barrel spike because the US is the new swing producer and has reserves to outcompete Saudi Arabia
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>>1600641
Isn't Iran trading oil now as well? If so, the profits in oil have been set and the only future benefactors shall be the current ones.
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>>1599953
UWTI achieves its leveraged position using front month futures only
each month at expiry, UWTI rolls its contracts over to the new month
the new months contracts may (and are almost guaranteed to) have a different price than the ones that just expired, due to their theta (time) component
depending on your position (UWTI's is long) this can be beneficial or detrimental
http://www.investopedia.com/articles/07/contango_backwardation.asp
Basically oil can be slowly rising and you can still be losing money on UWTI. If you know how futures work it's great though
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>>1600623
this shit attitude everyone has is why i'm bullish as fuck
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>>1600659
It is estimated to cost around $55 a barrel to produce oil extracted from shale with the fracking method. It costs other countries $20 a barrel to put a big pipe in the ground and direct tap a trap for endless oil reserves.
Wasn't oil at $46 last week? The oil companies are operating at a smaller profit margin in order to become self sustaining. Saudi Arabia is freaking the fuck out.
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