RE:Two Stories To Be Told...Mat1791 wrote: HOU is suppose to be an investment vehicle tracking the forward contracts of the price of oil. It is not a stock! And unlike a stock, tracks an underlying commodity. There were mechinisims in place to make sure that the daily change in unit value would, as close as possible, change based on the daily value change of the underlying contract.
We all know that the vehicle broke down, and the original mandate for the etf is currently not being followed. They have suspended subscriptions indefinitely, eliminated the leverage, changed the futures contract it holds, and the dates the rollover occurs. As a result, HOU's unit price is not tracking it's underlying holdings.
Anyone that disputes this is simply LYING!!
The flip side of the story, HOU still currently and actively trades. The value per unit is trading at a significant premium and unlike it's original mandate, is presently trading like a stock. Demand, both on the buy and sell side (trading bias) is 100% moving the unit value of HOU. There continues to be opportunity to make and lose money just like any other investment vehicle.
If your a trader, who is just looking to make money based on the changing unit value of HOU (technicals) ,then all the best, and that's your side of the story. Until it's fixed (completely unknown)
If you are an investor, who was looking to invest in the future price of oil (fundamentals), then HOU is not, at the moment, the investment you are looking for. It's broken...
M
Rightly Said Matt. But a more important question is why has the regulator (IIROC) not suspended trading of this etf, starting the day the tracking mechanism broke. They just halted and then allowed the trading to resume !!!!. This is utter negligence on their part as most of the investors on this board have no clue what has happened with this etf. This etf was halted the day oil went down more than 50% on its May as well as June futures the same day. As a result, the etf should have folded as the NAV should have hit Zero. But the ETF issuer very conveniently asked for a halt in that trading session. I believe HOD holders that day should initiate a class action lawsuit as they got robbed in broad daylight.