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DXO

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Joined: Apr, 2008
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Posted: #1
Does anyone understand these Ultra Long Ultra short funds?  It seems like they are just traded but not adjusted to there internal price.  I noticed that with SKF especially but now I'm looking at DXO; if this is double long oil why doesn't it move that way?  I'm considering making a Big play on this as it "seems" undervalued in relation to spot price but also because I feel Oil will eventually settle higher.  However I'm still not clear exactly what DXO represents.

Thanks
 
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Posted: #2
No one knows how to price any of these ETFs.  The pricing is similar to way out of the money stock options where the market makers price their bids/asks on nothing except momentum.
 
As much as you know about commodities (PMs in particular), Palladium, why don't you just buy oil futures?
 
To me, DXO, USO, etc....are all pricing rip-offs.  No one can or has ever been able to give any type of valid model for how they are priced.  Basically, the market makers decide where they are priced, and we all know what that means.
 
Cheers
 
 
 
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Posted: #3
No one knows how to price any of these ETFs.  The pricing is similar to way out of the money stock options where the market makers price their bids/asks on nothing except momentum.
 
As much as you know about commodities (PMs in particular), Palladium, why don't you just buy oil futures?
 
To me, DXO, USO, etc....are all pricing rip-offs.  No one can or has ever been able to give any type of valid model for how they are priced.  Basically, the market makers decide where they are priced, and we all know what that means.
 
Cheers
 
 
 
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Posted: #4
Clay,

I swore off Futures and Options as I no longer believe I can time anything.  I'm going on a gut instinct that Oil will go higher :) and as I don't know when that will be I'm looking to build a position in something closely tied to the spot price.  If you have any other ideas let me know.
 
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Posted: #5
Yeah, when a gallon of water is costing more than gallon of unleaded, you know the writing is on the wall.
 
I don't think you can go wrong just getting long USO, but the way that price is manipulated bothers me.  It'd probably be best to get long it on a bad day for oil longs, and then sell it when it starts making its parabolic move back to 150-200 a barrel within the next 2 years.
 
You certainly won't lose any money unless something like solar powered transportation hits the scene by the end of 2010----it won't.
 
Cheers
 
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Joined: Feb, 2008
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Posted: #6
DXO trades off of the June 2009 contract for light sweet crude oil.  See the link below. 
 
 
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Posted: #7
That's it I'm buying DXO, USO, and UCO.  When oil goes up I'll make money
 
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Posted: #8
You probably had a nice day yesterday as did I...sold the UCO for a 3 pt gain.  Acquired DIG at $25.75 before Christmas. 
 
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Posted: #9

sasquatch,

I have so much of money tied up that I only bought 1k DXO and a 100 shares of the other two.  That said I'm just going to hold through the summer.

 
Prospect
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Joined: Feb, 2008
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Posted: #10
Sold 5000 DXO at 3.15, hope to get in lower next week.  Sold the DIG at $31 today.  I hope to get back into UCO and DIG soon.
 
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Posted: #11
Quote Originally Posted by sasquatches1:

Sold 5000 DXO at 3.15, hope to get in lower next week.  Sold the DIG at $31 today.  I hope to get back into UCO and DIG soon.




you are making some nice cash playing this one.  Nicely done. 
 
 
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Joined: Nov, 2006
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Posted: #12
Quote Originally Posted by PALLADIUM:

Does anyone understand these Ultra Long Ultra short funds?  It seems like they are just traded but not adjusted to there internal price.  I noticed that with SKF especially but now I'm looking at DXO; if this is double long oil why doesn't it move that way?  I'm considering making a Big play on this as it "seems" undervalued in relation to spot price but also because I feel Oil will eventually settle higher.  However I'm still not clear exactly what DXO represents.

Thanks


Double daily performance does not equal double yearly performance.  Do the math and you will see that the leveraged ETF's should be used for trading and not holding long term.

Just look at DIG and DUG, both ETF's were down for the year last year.

DIG went from $111.48 on Jan 2 '08 to $31.55 Jan 2 '09
DUG went from $35.51 on Jan 2 '08 to $22.70 Jan 2 '09
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