BetaPro Crude Oil Leveraged Daily Bull ETF T.HOU

Two Stories To Be Told...

[Mat1791]

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

[madboy2]

Would you short with the current premium?

[Mat1791]

In my calculaitons NAV is around $9.   So it seems at $20 that would make sense.   However, I caution you, no one seems to know how this will get fixed??

[Barrhead]

Thanks Mat1791 for all your valuable input, and with no agenda on top of it! Keep up the great work Mat you're one of the rare ones on this Forum. You'll reap what you sow and wish you the best. After my limited experiences with HOU, these folks IMO cannot be trusted to seed a straight row even in a furrow. Caution is the key with this one, and GLTA involved with their HOU investments

[Chris_toronto]

I agree with everything positive you said about Mat1791. He has, however, been short HOU for sometime, I believe.

[itharami]

Do you mean, you think Mat is shorting HOU?

[Chris_toronto]

Yes. I also hold puts on HOU as I think its price should correct significantly down. I'm partially hedged by being long HUC (Dec oil contract trading at NAV)

[ufoolme]

Are you consolidated to Hou1 or HOU2.  HOU puts are no longer traded.  Consolidated at 1:20 just like the stock.  So a HOU1 or HOU2 put. Is for 5 shares, not 100.  Strike prices are multiplied by 20.

[itharami]

I can't say for sure Mat is not shorting HOU, I can say that I lost money on HOU when they changed its functionality and I didn't understand what was happening until Mat explained. As for HUC, you think this will go up?  I am not sure what HUC tracks?  Horizon's website says Winter Term Crude Oil December.  Is this a december contract for WTI?  Could you please

[Chris_toronto]

I think the December oil price will be significantly higher, yes, and that's why I think HUC will go up. That's the idea behind holding it :) Meanwhile, for June and maybe even July, oil has a very serious problem with too much supply and too little demand to match it. Suppliers didn't have time to adjust so there is an enormous glut right now. fwiw, Oil spiked on the close at 2:30

[Mat1791]

Yes Itharami, it currently tracks Dec2020 but will roll to Dec 2021 in June.   My plans are to hold HUC till HOU gets fixed.   Hopefully before June.   If it's not fixed by then I will have to reevaluate whether or not HUC is worth holding past the rollover.

[itharami]

Thank you both Mat and Chris.  I will look into this etf.

[Saultguy]

I also hold puts on it but there is no decent market to either sell them or buy them as no new opening positions seem to be permitted. Are you seeing the same thing, or is it just my trading platform? Any idea when normal options trading may resume?

[Chris_toronto]

I don't know if options for HOU will trade "normally" again, but you certainly can trade your position or any other option that was outstanding prior to the consolidation. If you can't see them in your account then call your broker and speak to the options desk. If you don't mind sharing the specifics of which puts are you holding then I can tell you what your options are

[Saultguy]

Thanks. I can see the bid and asks but there are hardly any since only closing trades are being permitted, seriously hampering the ability to get fair value out of them. Not really a fair situation to put current options holders in (they are not able to close their position happens unless their happens to be a corresponding holder of the other side of the option that wants to close their position

[Mat1791]

Thanks Guys, No never short, I had traded HOD (I guess short) for a few days before it broke also (although not as bad).  I've been holding HUC in the mean time, waiting for HOU to be fixed. Chris your post a while ago on why anyone wouldn't buy HUC was spot on, especially now that the forward contracts are only 3 months apart....

[madboy2]

this is why I'm not taking any action on that one. We never know. But on the other hand they cannot make appear a 10$ value from nowhere

[Stalion1987]

HI Matt1791 After the reverse NAV should be around $8.6 but ususally that will drop, but it is still way too much premium to pay, as the price is not following oil path I only can assume is it still way over price, I thinks NAV will be adjusted to about $6 ( assuming oil price stay around $17 ) and HOU price will follow to be closer to $6 and that is the time worth trading, in my opinion.

[Mat1791]

Stalion, I could live with HOU staying 1X as long as subscription is restarted.  I'm not interested in trading bias and only want the underlying commodity volatility... I had NAV around $9ish, so not willing to pay premium and really have no idea what the plans are to get this priced correctly??

[IndianSparrow]

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

[ufoolme]

They did not get robbed.  Had Horizons NOT halted trading, they would have lost EVERYTHING as it would now be $0.00.  By halting trading, suspending subscriptions, changing the leverage and underlying contract, they preserved some value for holders,IF THEYCHOSE TO SELL when it resumed. If they did not sell, then the risk is theirs and theirs alone. Class action suit for what?  Cause