Monday, April 28, 2008
Interesting article about an oil security that is going structurally defunct. Basically, UCR and DCR are designed to track crude oil prices with UCR rising if oil prices increase and DCR rising if oil prices decrease. Theoretically, these products should be able to co-exist as a teeter-totter with one rising as the other falls. What has happened is that the price of oil is so high that the math is breaking down at the top. A value vacuum has been created and the product is going to discontinue as of June 25. Not only very strange, but this is unfortunate giving the lack of product availability to commodities ETFs (see Gold).
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