When the price of oil took a dip into negative territory in April, one London-based trading house more than likely made out like a bandit during the historical plunge. For inspired short-term traders, they can look to oil exchange-traded funds (ETFs) to capitalize on further moves in the commodity.
“One trader bought 250,000 barrels of oil and secured a rare payout at a time when oil prices turned negative, causing jitters in markets and leaving most other traders scrambling to find storage options across both sides of the Atlantic, Bloomberg reported on Wednesday,” a Business Insider report noted. “But for BB Energy, a London-based trading house, the historic oil market crash was golden opportunity owed to its competitive advantage of having storage capacity over other firms, a source who was not authorized to speak on the topic, told Bloomberg.”
“US oil prices hit an all-time low of -$37.63 on April 20 due to an extreme shortage in storage options for oil, meaning most traders apart from BB Energy had to effectively pay traders to take the oil off their hands,” the report said further. “It remains unknown whether BB Energy is still holding on to the barrels it bought and how much the trading-house paid (or indeed was paid) for them as well as how much it made.”
Short-term traders betting on even more price increases can look to ETFs like the United States 3x Oil (NYSEArca: USOU) and the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSEArca: GUSH).
OILK seeks to provide total return through actively managed exposure to the West Texas Intermediate crude oil futures markets. The fund’s strategy seeks to outperform certain index-based strategies by actively managing the rolling of WTI crude oil futures contracts.
The fund generally will not invest directly in WTI crude oil futures. The advisor expects to gain exposure to these investments by investing a portion of its assets in the ProShares Cayman Crude Oil Strategy Portfolio, a wholly-owned subsidiary of the fund organized under the laws of the Cayman Islands.
On the bearish side of the trade, there’s the Direxion Daily S&P Oil & Gas Exploration & Production Br 3X ETF (NYSEArca: DRIP). DRIP seeks daily investment results that equal 300% of the inverse of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index, which is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS).
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