ProShares UltraShort Bloomberg Crude Oil (SCO)

Overview

ProShares UltraShort Bloomberg Crude Oil (SCO) seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance of the Bloomberg Crude Oil Subindex. It offers a way to profit from a decline in crude oil prices but is designed for short-term trading due to its leveraged nature.

Reputation and Reliability

ProShares is a well-known issuer of leveraged and inverse ETFs. They have a long track record in the market, but their products are known to be complex and require active management.

Management Expertise

ProShares has a team of experienced investment professionals specializing in managing leveraged and inverse ETFs.

Goal

To deliver two times the inverse (-2x) of the daily performance of the Bloomberg Crude Oil Subindex.

Investment Approach and Strategy

Strategy: The ETF uses financial instruments such as swap agreements to achieve its leveraged inverse objective. It aims to provide -2x the daily return of the Bloomberg Crude Oil Subindex.

Composition The ETF primarily holds swap agreements and other derivative instruments linked to the Bloomberg Crude Oil Subindex. It also holds cash and money market instruments for collateral purposes.

Market Share: The market share of SCO fluctuates significantly based on market conditions and investor sentiment towards crude oil.

Total Net Assets (AUM): 67390000

Key Competitors

• MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD)
• Direxion Daily Energy Bear 3x Shares (ERY)

Competitive Landscape

The ETF industry for inverse crude oil products is competitive, with various providers offering similar leveraged strategies. SCO offers a -2x leverage, providing a different risk/reward profile compared to other similar products like NRGD and ERY that offer -3x leverage. SCO's advantage lies in ProShares' established presence and the -2x leverage may be preferred by some investors over the 3x leverage provided by competitors.

Historical Performance: Historical performance data is highly volatile due to the leveraged inverse strategy. It's best to consult financial websites for updated returns.

Benchmark Comparison: The ETF aims to deliver -2x the daily performance of the Bloomberg Crude Oil Subindex, so its performance should be compared against -2x the returns of this index.

Expense Ratio: 0.95

Average Trading Volume

SCO exhibits moderate liquidity, with a daily average trading volume that can vary based on market conditions, but generally facilitates order execution.

Bid-Ask Spread

SCO's bid-ask spread is typically small, but widens during periods of high volatility or low trading volume.

Market Environment Factors

Economic indicators, geopolitical events, supply and demand dynamics in the crude oil market, and inventory levels significantly influence SCO's performance.

Growth Trajectory

The ETF's growth trajectory is directly tied to crude oil price movements and investor appetite for leveraged inverse products. There are no strategic changes and holdings remain static.

Competitive Edge

SCO's competitive edge comes from its established presence as a leading inverse crude oil ETF, providing -2x leverage, which caters to investors seeking amplified exposure to oil price declines. ProShares' reputation and market presence contribute to its appeal. However, it's crucial to acknowledge that leveraged inverse ETFs are primarily suitable for short-term trading strategies, given the potential for compounded losses over longer periods. SCO's liquidity may be higher than some competitors, facilitating easier trading.

Volatility

SCO exhibits high volatility due to its leveraged inverse strategy. The daily reset feature and the nature of crude oil markets amplify price swings.

Market Risk

SCO is subject to significant market risk, including crude oil price fluctuations, counterparty risk (associated with swap agreements), and the risks inherent in leveraged investing.

Ideal Investor Profile

SCO is suitable for sophisticated investors with a high-risk tolerance who understand the risks associated with leveraged inverse ETFs. Ideal investors are those who actively monitor crude oil prices and have a short-term trading horizon.

Market Risk

SCO is best suited for active traders seeking short-term tactical exposure to potential crude oil price declines. It's not appropriate for long-term investors.

ProShares UltraShort Bloomberg Crude Oil (SCO) is a leveraged inverse ETF designed for sophisticated investors seeking to profit from short-term declines in crude oil prices. The ETF aims to deliver -2x the daily performance of the Bloomberg Crude Oil Subindex. However, due to the leveraged nature and daily reset, it is designed for short-term trading and involves significant risk. Understanding the underlying market dynamics, including crude oil prices, market volatility, and the potential impacts of compounding, is crucial for effectively trading SCO.

• NRGD
• ERY
• OILK
• DTO

Data Sources:

• ProShares official website
• Bloomberg
• Yahoo Finance
• ETF.com

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered financial advice. Investing in ETFs involves risk, including the potential loss of principal. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.