An ETF that takes a long position in oil and shorts U.S. stocks rallied 10% on Tuesday on the heaviest trading volume in over a year amid speculation the U.S. could launch military action against Syria.
FactorShares 2X: Oil Bull/S&P500 Bear (NYSEArca: FOL) saw trading volume spike to over 45,000 shares on Tuesday afternoon, compared with average daily volume of only 800 shares the past three months.
The fund is a “leveraged spread ETF” designed for investors who believe crude oil will increase in value relative to large-cap U.S. equities in one day or less, according to provider FactorShares.
The fund establishes a leveraged long position in crude futures, combined with a leveraged short position in E-mini S&P 500 futures. The S&P 500 was down 20 points, or 1.2%, on Tuesday. Crude oil futures rose nearly 3% to touch $109 a barrel on fears the U.S. could hit Syria with a military strike.
FOL is a relatively small ETF with about $1.5 million of assets. The highly specialized fund is certainly designed as a trading vehicle for hedging and speculation.