ProShares Ultra Bloomberg Crude Oil (UCO)
ARCA ARCA Primary Summary
UCO Chart
UCO: It Is Still For The Pros
UCO is a highly risky, leveraged ETF. Even during recent oil price spikes, UCO investors likely lost money due to the fund's structure and information lag. Long-term returns for UCO are poor.
UCO: Trade War And Recession Will Keep Crude Prices Subdued
Despite what may seem like an attractive price level for WTI crude, which was trading at US$61.30/bbl at the time of writing, we are staying away from this trade. Historically, we have been bullish on UCO whenever WTI crude drops to around $70/bbl, but current risks outweigh potential gains. Unless the Trump administration manages to seal major trade deals from the upcoming negotiations, business activity and consumer spending will likely begin to stall.
UCO: Stay Out At This Price
I recommend holding the ProShares Ultra Bloomberg Crude Oil ETF due to expected oil market surplus and increased global supply, which should pull prices down. The ETF aims to replicate twice the daily return of the Balanced WTI Crude Oil Index, making it suitable for short-term movements, not conservative investors. Oil prices have risen over 9% this year, driven by sanctions and cold weather, but the imbalance between supply and demand will likely stabilize prices.
ProShares Ultra Bloomberg Crude Oil (UCO) FAQ
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ProShares Ultra Bloomberg Crude Oil Profile
| ARCA Exchange | US Country |
Overview
The company is focused on achieving its investment objective through a strategic approach that primarily involves investing in a range of financial instruments. These instruments include swap agreements, futures contracts, forward contracts, and option contracts, all of which are based on WTI (West Texas Intermediate) sweet, light crude oil. It is important to note that the company does not invest directly in oil, choosing instead to leverage these financial instruments as a means to participate in the oil market indirectly. This strategy is designed to navigate the oil market under normal market conditions, aiming to offer investors a unique avenue to gain exposure to oil prices without the complexities of direct commodity investment.
Products and Services
The company offers a unique investment approach through the use of various financial instruments that correlate with the price movements of WTI sweet, light crude oil. These are detailed as follows:
- Swap Agreements: These are contracts through which two parties exchange financial instruments or cash flows, based on the underlying price movements of WTI crude oil. This allows investors to gain exposure to oil prices without owning the physical commodity.
- Futures Contracts: Contracts to buy or sell a specific amount of WTI crude oil at a predetermined price at a specified time in the future. These are used to hedge or speculate on the future price of oil, providing a pathway for investment in oil price movements.
- Forward Contracts: Similar to futures contracts, these are non-standardized agreements between two parties to buy or sell WTI crude oil at a future date, but with more flexibility in terms of contract terms. They offer another method for investors to engage in the oil market indirectly.
- Option Contracts: Contracts that give the buyer the right, but not the obligation, to buy (call option) or sell (put option) WTI sweet, light crude oil at a specified price (strike price) before a specified date. This offers investors a risk-managed way to speculate on or hedge against oil price movements.
Contact Information
