Saturday, February 7, 2009

UCO Straddle Results

With regards to the UCO straddles posted yesterday, here are the results.

(please click to enlarge)

On Thursday, UCO traded between $9.35 and $10..10 On Friday, it suffered very large swings and it oscillated between $9 and $10.80 (approximately a 20% swing!). The chart shows two exit strategies, one returning +41% and +25% profit.

Buying UCO may be considered akin to straight gambling, and as posted here a fewtimes, 2X ETFs retuns huge profits for the issuers of the ETFs, but this is another way that a normal small investor can profit by taking advantage of the tremendous volatility of UCO.

Straddles are also great as oil can go anywhere, down or up, and the investor can still profit. It does not matter which way oil price goes.

Note that these options still offer relatively low liquidity, and note that there were two weeks to expiration.

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