Q&A: Oil ETFs

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A reader wants to play the rising/falling oil price by using ETFs. What are his options?


Q – Please advise names/symbols of Canadian stocks trading based on the daily oil price similar to the iShares Gold ETF (TSX: CGL). – Stephen A.

A – If I interpret your question correctly you are looking for a Canadian ETF that tracks oil prices. The only one I know of is the Horizons NYMEX Crude Oil ETF (TSX: HUC).  It tracks the performance of the NYMEX light sweet crude oil futures contract for the next December delivery month. This ETF is denominated in Canadian dollars and any U.S. dollar gains or losses will be hedged back to the Canadian dollar to the extent possible.

If you’re looking for a leveraged play, the Horizons BetaPro NYMEX Crude Oil Bull Plus ETF (TSX: HOU) is a way to bet on a rise in the price of oil but it is highly risky. It lost 75% over the past six months. Of course, it will benefit when oil turns back up.

Its stable mate, the Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (TSX: HOD) allows you to bet on the price of oil falling. Not surprisingly, it has gained 219% in the past six months.

Note that I used the term “bet” in reference to the leveraged funds. That’s because I don’t regard them as investing but rather gambling. I don’t advise that kind of speculative trading. – G.P.


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