OOO - Betashares Crude Oil Index ETF - Currency Hedged (Synthetic)

[aus_trader]

My US broker stopped allowing shorts on USO a while ago. I'll be interested to see if they'll allow it now the price is much higher.

That would be interesting to see, once the consolidation/reverse-split is complete. Keep us informed Peter

Yes the 50min podcast posted by InsvestoBoy was really helpful to help us understand the mechanics of what was happening and what could continue to happen if the Oil demand doesn't go back up anytime soon...

Some good news for us Aussies:

https://www.abc.net.au/news/2020-04...crude-oil-purchase-teaches-economics/12185546
A nice video also on that article, further down.

 

[cutz]

@aus_trader

Good evening, I just checked US oil, shorting is allowed with the uptick rule now removed.

 

[aus_trader]

@aus_trader

Good evening, I just checked US oil, shorting is allowed with the uptick rule now removed.

Thanks cutz, I am up monitoring what the F this thing is up to. As usual: A massive underperformance by about 6:1 to Oil price.

Yes I know all that said about Futures contracts being swapped around and contango etc, but man o man an ETF that is supposed to track Oil price, this is screwed up !

Here's the Black Liquid itself (Used to be so valued/priced and even called Black Gold):

Here's the ETF:

Gives little hope for asx: "OOO" to have a good recovery, even with a 27% odd price rise in Crude.

 

[aus_trader]

Thanks cutz, I am up monitoring what the F this thing is up to. As usual: A massive underperformance by about 6:1 to Oil price.

Yes I know all that said about Futures contracts being swapped around and contango etc, but man o man an ETF that is supposed to track Oil price, this is screwed up !

Here's the Black Liquid itself (Used to be so valued/priced and even called Black Gold):
View attachment 103071

Here's the ETF:
View attachment 103070

Gives little hope for asx: "OOO" to have a good recovery, even with a 27% odd price rise in Crude.

Well, it ("OOO") actually did better than it's US counterpart "USO", which was to my surprise:

 

[cutz]

Hello aus_trader

That's good news mate, I hope the runup continues, I notice spreads have also come off. Me personally been eyeing off an a US oil services company to add to my portfolio, I left a buy write in the market last night before going to bed but didn't get hit, stock closed on its high.

 

[Smurf1976]

Well, it ("OOO") actually did better than it's US counterpart "USO", which was to my surprise:

An approach that might have value would be for those so inclined to trade OOO as OOO.

That is trade it on the technicals of the OOO chart and completely ignore any idea about it having something to do with the oil price, just focus on OOO as OOO and ignore the oil bit.

 

[aus_trader]

An approach that might have value would be for those so inclined to trade OOO as OOO.

That is trade it on the technicals of the OOO chart and completely ignore any idea about it having something to do with the oil price, just focus on OOO as OOO and ignore the oil bit.

Well, it's on that trajectory longer term. Today's up turn will be just a blip barely visible...

 

[aus_trader]

Hello aus_trader

That's good news mate, I hope the runup continues, I notice spreads have also come off. Me personally been eyeing off an a US oil services company to add to my portfolio, I left a buy write in the market last night before going to bed but didn't get hit, stock closed on its high.

Well, at least you'll get to keep the premium if bottom is already in...

 

[frugal.rock]

Update.
So OOO has been behaving itself of late with quite a few impressive (for an etf) gap ups.
It took a 5.6% hit today though.

I wonder how long it will be before oil is above 60 usd per barrel again?
I would expect the etf to continue recovering as the scare wears off.
Meanwhile, back at the farm, production is or has been dropping.
Interesting weeks ahead for oil.
Can only hope OOO follows along.

F.Rock

 

[qldfrog]

Can only hope OOO follows along.

That is the issue,we have to hope that ooo behaves..so the reason i will avoid putting any substantial amount in, better go directly to oiler or drillers in my view..so US market
I doubt oil will be back much over $40 45 a barrel for long periods medium term as this would restart fracking in the US. Russia and the Saudis need to keep oil below $60.they will.
But that leaves still a nearly 50pc increase ahead to play with .not bad with the proper tools

 

[aus_trader]

That is the issue,we have to hope that ooo behaves..so the reason i will avoid putting any substantial amount in, better go directly to oiler or drillers in my view..so US market
I doubt oil will be back much over $40 45 a barrel for long periods medium term as this would restart fracking in the US. Russia and the Saudis need to keep oil below $60.they will.
But that leaves still a nearly 50pc increase ahead to play with .not bad with the proper tools

I also stopped playing with "OOO". It has been caught pants down

I think good quality oilers are my best tool for getting exposure to Oil, currently hold BPT in the "spec portfolio" and I may look to add others as oil price is heading back up.

 

[frugal.rock]

An approach that might have value would be for those so inclined to trade OOO as OOO.

That is trade it on the technicals of the OOO chart and completely ignore any idea about it having something to do with the oil price, just focus on OOO as OOO and ignore the oil bit.

From what I have seen on the chart and the way it's traded of late, the shorter term trend has me holding.
If current pullback continues, am expecting a $3 level test, otherwise a $4+ run, with a bit of luck...

As for ignoring the oil part, hmmm, at your peril?
Have put in a request for the markets to put some attention on OOO.
Note volume levels, picked up late March, peaked mid April, dropped off, now seemingly on the rise again, with the price thus far.

 

[aus_trader]

Good luck frugal.rock, hope the trades work out for you.

I have stopped looking at both local "OOO" and US "USO". I will only look at Oil spot price to see what the real market is doing rather than the ETF's.

Once the trust is lost and I figured out how these instruments are made up with futures contracts with contango issues, it made it clear to me that I am better off trading the local Oil stocks to get exposure to Oil price.

 

[Chronos-Plutus]

I also stopped playing with "OOO". It has been caught pants down

I think good quality oilers are my best tool for getting exposure to Oil, currently hold BPT in the "spec portfolio" and I may look to add others as oil price is heading back up.

Yes I tend to think the same here, although recently I have considered taking a percentage of the stake that I was going to use to buy an oil stock and buy OOO. Maybe something like 60% oil stock to 40% OOO.

This OOO ETF annoys me a bit as I thought of an oil ETF back in late 2010, early 2011 before they launched it.

I also thought of other ETFs diamonds, artworks and racehorses back at that time.

 

[beginnerinvestor]

Does anyone know why when the WTI price drops, OOO follows, but when WTI rises, OOO hardly goes up?

 

[Chronos-Plutus]

Does anyone know why when the WTI price drops, OOO follows, but when WTI rises, OOO hardly goes up?


View attachment 103846

OOO doesn't directly track the WTI, it tracks the S&P GSCI Crude Oil Index Excess Return. So you need to study this index to know how OOO performs. Also OOO is hedged to currency volatility.

 

[beginnerinvestor]

Can investors lose all their money or the fund would be closed if the OOO price goes to zero?

Or I could still have a zero balance at one point, and still hold the etf, but then wait for the OOO price to go back to eg $5 and then sell it?

 

[aus_trader]

Can investors lose all their money or the fund would be closed if the OOO price goes to zero?

Or I could still have a zero balance at one point, and still hold the etf, but then wait for the OOO price to go back to eg $5 and then sell it?

That's a very hard question to answer. You probably have to ask "Betashares", the fund manager itself to find out what happens in that case.

My best guess is "OOO" will still exist even in an $0 oil price environment and continue to erode any value in it. Then if and when the oil price goes back up it'll massively underperform which is why I have decided to play Oil price in better ways. And that way in my opinion, is to buy beaten down quality Oil stocks when the Oil price gets hammered or trades down to zero levels.

I don't want to directly recommend any Oil stocks since that would be giving investment advice. But if you wish to see which Oil stock I currently own and is showing profits with the Oil price rebound as well as my other stock holdings, see Speculative Stock Portfolio. It's not a 'buy and forever hold' portfolio but stocks generally gets traded over longer time periods (months/years).

 

[beginnerinvestor]

That's a very hard question to answer. You probably have to ask "Betashares", the fund manager itself to find out what happens in that case.

My best guess is "OOO" will still exist even in an $0 oil price environment and continue to erode any value in it. Then if and when the oil price goes back up it'll massively underperform which is why I have decided to play Oil price in better ways. And that way in my opinion, is to buy beaten down quality Oil stocks when the Oil price gets hammered or trades down to zero levels.

I don't want to directly recommend any Oil stocks since that would be giving investment advice. But if you wish to see which Oil stock I currently own and is showing profits with the Oil price rebound as well as my other stock holdings, see Speculative Stock Portfolio. It's not a 'buy and forever hold' portfolio but stocks generally gets traded over longer time periods (months/years).

I got an email reply from them today

"If the Net Asset Value (NAV) of the fund were to reach $0.00, it is likely that the fund would be closed, and investors would lose all initial investment permanently."

Why do you think it will massively underperform?

The price of the etf was around $15 for most of last year, so I was thinking it could get to that level in 2-3 years.

 

[aus_trader]

I got an email reply from them today

"If the Net Asset Value (NAV) of the fund were to reach $0.00, it is likely that the fund would be closed, and investors would lose all initial investment permanently."

Why do you think it will massively underperform?

The price of the etf was around $15 for most of last year, so I was thinking it could get to that level in 2-3 years.

Well there you go. You could lose the entire investment after all !

Both Aussie "OOO" and it's brother from another mother US "USO" will both underperform Crude Oil price. Both over longer periods of time as you are suggesting due to fees and futures contracts swaps and in the short term as we found out with Contango issues, I'll copy and paste what I posted earlier for your consideration:

Thanks cutz, I am up monitoring what the F this thing is up to. As usual: A massive underperformance by about 6:1 to Oil price.

Yes I know all that said about Futures contracts being swapped around and contango etc, but man o man an ETF that is supposed to track Oil price, this is screwed up !

Here's the Black Liquid itself (Used to be so valued/priced and even called Black Gold):

Here's the ETF:

Gives little hope for asx: "OOO" to have a good recovery, even with a 27% odd price rise in Crude.