Posted by canadianguy on 17th of Feb 2009 at 11:10 pm
hou.to is a nightmare because of the contango. right now the
march contract is trading around $35, it will expire on friday this
week. then next week we will be into the april contract. Right now
I think april is trading at $40ish. when this becomes the front
month contract, it will inevitably go down to support on the spot
price at $33-35. This is a decline of about 15%, on a double etf
that is 30%. HOU.TO was $10 in december when oil was the exact same
price - it has lost 50% on the contango effect. (it is $4.36
now)
In some ways buying HOD.TO (The opposite, like
dig/dug) is a guaranteed way to make money until/unless the
contango goes away or the front month stops falling from $40 in its
first day to $33-35 by the end of the contract. HOD was below
$20 the last week of December when the December contract
expired at around these prices, and with very little decline
in crude it has doubled.
You're right -- I hadn't been taking into account contango
(which is hitting USO too). I have a paper trade on HOU.TO dating
back weeks and week which is in massive profit and have been
waiting for a chance to actually get into a real trade (using
HOD.TO as a proxy for a short). But maybe I should just go
ahead.
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hou.to is a nightmare because
DXO, etc.
Posted by canadianguy on 17th of Feb 2009 at 11:10 pm
hou.to is a nightmare because of the contango. right now the march contract is trading around $35, it will expire on friday this week. then next week we will be into the april contract. Right now I think april is trading at $40ish. when this becomes the front month contract, it will inevitably go down to support on the spot price at $33-35. This is a decline of about 15%, on a double etf that is 30%. HOU.TO was $10 in december when oil was the exact same price - it has lost 50% on the contango effect. (it is $4.36 now)
In some ways buying HOD.TO (The opposite, like dig/dug) is a guaranteed way to make money until/unless the contango goes away or the front month stops falling from $40 in its first day to $33-35 by the end of the contract. HOD was below $20 the last week of December when the December contract expired at around these prices, and with very little decline in crude it has doubled.
You're right -- I hadn't
Posted by unsane on 17th of Feb 2009 at 11:37 pm
You're right -- I hadn't been taking into account contango (which is hitting USO too). I have a paper trade on HOU.TO dating back weeks and week which is in massive profit and have been waiting for a chance to actually get into a real trade (using HOD.TO as a proxy for a short). But maybe I should just go ahead.