Alternatives to Popular Leveraged Oil ETNs Set to Delist

Two hugely popular leveraged exchange exchange traded notes that allow aggressive traders to speculate on crude oil price moves are set to delist next week. Nevertheless, active investors still have some alternative exchange traded fund options to utilize.

Credit Suisse AG, the underwriting bank for the $1.5 billion VelocityShares 3x Long Crude ETN (NYSEArca: UWTI) and $176 million VelocityShares 3x Inverse Crude (NYSEArca: DWTI), announced earlier this month that it will delist and suspend further issuance of the two leveraged ETNs effective December 9.

Once delisted, the two ETNs will remain outstanding, but they will no longer trade on any national securities exchange. However, the ETNs may trade on an over-the-counter basis if at all. In the meantime, Credit Suisse’s announcement “may influence the market value” of the funds, potentially diminishing liquidity and causing traders reduce activity in the investments before their delisting.

More aggressive oil traders, though, may still garner leveraged exposure to the energy market through other fund options. For instance, while they are not as big as the popular triple-leveraged ETNs, bullish traders can consider the ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO), which takes two times or 200% daily performance of WTI crude oil, and bearish investors can take a look at the ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO), which tries to reflect the two times inverse or -200% daily performance of WTI crude oil, and DB Crude Oil Double Short ETN (NYSEArca: DTO), which also follows a -200% performance of oil.

UCO has $897 million in assets under management and shows an average daily volume of 11.1 million shares. SCO has $150.1 million in assets and trades with an average daily volume of 683,700 shares. Lastly, DTO has $62.5 million in AUM and a daily volume of 21,000 shares.

For more information on the crude oil market, visit our oil category.