After climbing to almost $140 a barrel in early March, Brent Crude futures fell in nearly a straight line and now sit just above the pivotal $100 mark. The global economy is catching up to sky-high prices, giving investors a case of the butterflies.
Experts call for heightened volatility in oil prices heading into the summer as investors grapple with a barrage of influencing factors. Our recommendation for today is a short-term play that will appeal to active investors when they want to take a bearish stance on oil.
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The ProShares UltraShort Bloomberg Crude Oil (SCO) tool used by active investors who seek to capture gains from plunging oil prices. The fund offers daily short exposure to crude oil prices through futures contracts, not the spot price of oil. It is currently short futures that expire in March 2022, June 2022, and December 2022.
The fund is structured as a commodity pool, a private investment tool structured to combine investor contributions for trading futures and commodities markets. The ETF seeks daily investment returns, before fees and expenses, that are two times the inverse (-2×) of the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index.
Given that they respond to daily movements in the underlying securities they represent, leveraged ETFs can be riskier investments than non-leveraged ETFs, and losses can be amplified during adverse price moves. Plus, leveraged ETFs are designed to achieve their multiplier on one-day returns, but you should not expect them to do so on longer-term returns. In other words, leveraged ETFs should not be found in a buy-and-hold portfolio.
The combination of both inverse and leveraged strategies makes SCO an incredibly complex instrument and should be approached with respect and caution. Investment tools like SCO should be avoided by less sophisticated investors and anyone with a low tolerance for risk.
Should you invest in SCO right now?
Before you consider buying SCO, you'll want to see this.
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And it's not SCO.
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Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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