DXO/DTO Traders out there?

Yeah. I've just never seen it act this differently. Normally you can watch the current price of the oil on the ticker and dxo/dto is pretty faithful to its moves. Of course, the one day it goes the opposite direction is the day I go in big around $2.45, anticipating a daily move up in the coming month's price (don't you hate losing money when you guess right, I mean wrong).

Btw, if you can get it around where it's at now, it could be a real nice swing trade. Or not. Who knows. Recently a buy in the $2.40s was a great place to get in.
 
I wonder if anyone can help me with this. I found the page that gives which futures contract is being traded by DTO/DXO here.

The long index is currently trading the July futures contract that expires on 6/22/09, and the short is trading the April contract that expires on 3/20/09.

Okay, well on Friday 2/13/09 the July futures contract was down 2.25%. But DXO went down 6.72%, well more than twice that amount. (OLO down 3.38%)

Meanwhile, on Friday 2/13/09 the April contract was down 0.17%, but DTO went up 2.57% on the same day. (SZO up 0.94%).

So why are the results for DXO/DTO so different from what the connected futures contracts are doing?

If you can explain anything to me here, thanks in advance.
 
I called Invesco PowerShares and asked them about the above. Basically, he said that the differences were due to trading on DXO/DTO outside of the futures trading hours.

He said that the price should remain faithful to the futures while futures trading is going on, but that the price of DTO/DXO will change based on fundamental buying and selling outside of futures trading hours.

I didn't have a ton of confidence in the things he was saying in general, but DXO I have seen does trend right along with the July crude contract during the hours for futures trading.
 
Quote from MacDRider:

I called Invesco PowerShares and asked them about the above. Basically, he said that the differences were due to trading on DXO/DTO outside of the futures trading hours.

He said that the price should remain faithful to the futures while futures trading is going on, but that the price of DTO/DXO will change based on fundamental buying and selling outside of futures trading hours.

I didn't have a ton of confidence in the things he was saying in general, but DXO I have seen does trend right along with the July crude contract during the hours for futures trading.
More...

I called them again because I didn't have any faith in the guy answering the question, and the person I spoke to today gave me what is probably the correct answer. He said that these ETNs only track the futures basically (plus a little bit in T-Bills), so the price moves are pretty much only based on the movements in the futures contracts on a nearly 24 hour basis (23 1/2 hours to be exact).

I also asked him about how to determine things like the new principal amount for each month, as explained in the prospectus, and he refused to answer the question (didn't know). He said I could call Deutche Bank at 877-369-4617, but said they weren't likely to tell me either.

He says the shorts like DXO reset to their new contracts every 2nd - 6th of the month. For example, from the 2nd to the 6th of March it would change by 20% per day from the April contract to the May contract.

The long also changes on the 2nd - 6th the same way, but the longs have been tracking the July futures since the beginning. This means the long contracts won't change for DXO until the 2nd - 6th of June, but I don't think they know yet (?) which contract it will change to from the July futures contract at that time.
 
Greetings!

Tough day today. I have been trying to exploit a relative strength
based approach to rank ETFs.

DTO has been the top ranked ETF for a long time now.

I have been making weekly posts on my blog: http://investics.wordpress.com/etf-performance/

Please do take a read, I would love to hear your comments and promise
to reply to ALL comment ASAP.

Good Luck!!

PS:- I am a retail investor, I have nothing to sell, just curious to
exchange ideas.
 
Here's my response to your blog:

The ONLY reason you would want to buy DTO right now is if you think the spot price of crude is going down. As I write this now it�s around $34.50, and I could certainly see it going down to $33, $32, $31, or $30 (lower than that seems less than likely to me, but what do I know?). And if oil does go down into the low $30�s, then under almost NO circumstances would you want to buy DTO, and under no circumstances at all would you want to hold DTO for the long-term.

If oil goes back up to $37 - $40 and you think it�s going back down again to at least $35, then DTO is a good SHORT-TERM swing trade only.
 
JMO investics, but unless you think oil is going below $30 for a significant length of time, then I would sell your DXO sometime when oil is between $30 - $35 and be very happy with your very nice profit.

If oil just stays around the low $30s (which some would consider a bearish forecast anyway) then you won't make much more with it by continuing to hold it, and if anything you could certainly lose a little or a lot more.

If I understand DXO correctly (I may not, although I'm trying very hard to), then spot prices should go up into the next contract, and DTO would lose money during the first week of March over the 2nd - 6th.
 
Also understand that the whole reason that DTO has been such a good performing ETN over time is that since it started trading last summer oil has plunged hard since then. The question is how much further oil can and will go down. It's just barely under $35 at the moment, and the best bets for its bottom is probably somewhere between $25 and $35 (but who knows). So there's not a lot more upside with DTO anymore IMO.
 
You must log in or register to reply here.
Back
Top