Everyday I get emails and questions from traders and investors about trading crude oil using ETF's. And unfortunately most have had a bad experience with trading these ETF's based on crude oil futures because they did not do their homework first. Unlike equities, which entitle the holder to a continuing stake in a corporation, commodity futures contracts specify a delivery date for an underlying physical commodity.
Very important to understand is the Dow Jones—UBS Commodity Index. It uses the settlement prices for the underlying futures contracts. The DJ—AIGCI rolls its contracts over the course of 5 consecutive business days, starting on the 6th business day of the month. Each day, 20% of each futures position that is included in the month’s roll is rolled. Not all contracts are rolled every month.
Before you take another step trading crude oil ETF's such as DXO, DTO, SCO and UCO read and download "A Primer on Index Calculation and Performance".
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