However, some argue that the spike in prices Thursday was just a knee-jerk reaction to the sudden uncertainty, and the markets could return to the supply glut pressures. [Potential Storage Crisis Could Put Oil ETF In A Tailspin]
“A lot of times you get the market reacting dramatically right off the bat to events like these, before people begin putting things in perspective after a greater study of the risks involved,” Phil Flynn, analyst at the Price Futures Group, said in the article.
Consequently, if the Yemen-induced volatility is short lived, ETF investors may be back to inverse options as a way to hedge or capitalize on the fall in oil. For instance, the United States Short Oil (NYSEArca: DNO) tracks the opposite moves of the West Texas Intermediate crude oil futures, DB Crude Oil Short ETN (NYSEArca: SZO) tracks the simple inverse of oil, ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO) tries to reflect the two times inverse or -200% daily performance of WTI crude oil, DB Crude Oil Double Short ETN (NYSEArca: DTO) also follows a -200% performance of oil and VelocityShares 3x Inverse Crude (NYSEArca: DWTI) takes the three times inverse or -300% performance of crude oil. [Investors Capitalize on Oil Swings with Leveraged ETFs]
United States Oil Fund
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Max Chen contributed to this article.