Monday, August 15, 2011

Trade updates USO, XIV, Oil and Volatility

In the last few minutes of trade today I closed my position in USO and closed half of my position in XIV.

The USO Trade has returned 435 dollars after costs. It doesn't feel like a great trade, I normally would have used a leveraged product, DIG might have returned double this amount and RH22 could have returned four times as much. However its still more than a years worth of interest on a savings account, or enough to fill my car with petrol for the next 13 weeks.

If I wasn't overweight the oil industry in my long term portfolio I would have held this position for a few more days, it does look as if there is more profit in it.

I will not use USO to trade oil again for the reasons outlined in the link below.

How To Trade Oil USO

The XIV Trade has returned 470 dollars after costs.

The Fear Trade - XIV

I have kept half of the position open with the intention of buying the dip if there is some negative news out of the Europe meetings tomorrow. This product has its problems, as per previous posts it suffers from significant tracking error however the recent move in VIX is sufficiently large that even with tracking error XIV should provide a significant return.

No new positions opened and not intending to look for new opportunities unless there is a pull back towards the recent lows.

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