popeye

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Fri Jul 4th 10:08 AM | Rating: 0 0
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Another Macroshares Oil Arbitrage Opportunity

There is one flaw in your theory. You are assuming that USO = Crude Oil. This is crucial to your hedging strategy and it is incorrect.

USO has susbtantially lagged Crude Oil over last few years. It has big tracking error (to the downside) over the long term.

So, over long term, USO will have larger % move to the downside than DOY. So, you are more the puts you sold on USO will appreciate more than your investment in DOY.
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