Unfortunately, the entire stock market today is a gamble on an unknown future thats predicated on continued stimulus. Maybe its a better gamble than a lottery ticket? But still a gamble wether you’re buying OOO or anything else. IMHO.
My view on this ETF is that now they’ve moved to a 3 month rolling contract there’s less risk in the fund overall. If you believe the Oil price will continue to run north given the relentless US reopening pressure then this is a buy/hold. If you believe it will go down or flatline then its a sell. But what we've seen in April with Oil will likely only be repeated should there be signs of a new US shutdown.
i would add that Contango nearly always exists in Commodities Futures contracts due to the relevant transport, storage, insurance, interest costs, etc. in trading commodities. In a rising market, the Contango that exists for a rolling contract ETF such as this will generally give you a ~5% gross profit haircut under normal circumstances. But, as we’ve seen in the last month, if you see a 30% increase in the contract price then 28% of that profit stays with you/the fund in the rollover process.
i would suggest that buyers of this ETF avoid looking at the oil spot price and instead look at the 2, 3, 4 and 5 month out WTI Crude Futures contracts. If they are ALL moving up day to day, and the differentials stay roughly similar in percentage terms as they move, then your only decision to make is will Oil be in higher demand than the available supply over the next 2- 4 months.
OOO Price at posting:
$19.36 Sentiment: Buy Disclosure: Held
