Contango Is Working Against U.S. Oil ETF Investors - The United States Oil ETF, LP (NYSEARCA:USO) | Seeking Alpha

Contango Is Working Against U.S. Oil ETF Investors - The United States Oil ETF, LP (NYSEARCA:USO) | Seeking Alpha



Here is a good article about the current and possible future situation for oil.  Nobody really knows how low the price of oil will fall, and there are differences of opinion on what kind of recovery oil will have.  I do agree with the author that there will not be a V-shaped return in the price of oil.



However, I think money can still be made from the current level.  I firmly believe that oil will make it back to the mid $60 range in several months or less.  Some hedge fund speculators agree with me.  So, I entered a trade with ERX, the 3x long energy ETF today.  I saw that ERX had dropped almost $8 per share by around noon.  That was too good to pass up. 



I bought ERX at $53 and change, and I plan to hold the stock until it gets back to $61 again.  The stock has already traversed this oversold path before when it dropped to $46 in December and quickly climbed back $61.  This trade is definitely worth a small part of my portfolio money.  I will make 15% on this trade in probably 30 days or less.  Then, I will try to find the next 10-15% trade although I don't know when it will happen or what stock it will be.