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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: SARMAN who wrote (15501)	2/18/2009 3:29:33 PM
From: Nixpix	Read Replies (3) \| Respond to of 50424

I own DXO and bought more yesterday....thought about buying more today, but not sure I understand the whole process explained below in the discussion....seems like today would be a good day to buy more. At some point oil has to go up-----and if this trades 5 months out---it seems that within 6 to 12 months due to inflation, if nothing else, that oil should go up and this should be profitable. Am I missing something??? Would be interested in hearing what others that have purchased DXO think...... and input on your thoughts about the info below. Nixpix Posted by MacDRider on 02-14-09 07:29 PM: I wonder if anyone can help me with this. I found the page that gives which futures contract is being traded by DTO/DXO here. The long index is currently trading the July futures contract that expires on 6/22/09, and the short is trading the April contract that expires on 3/20/09. Okay, well on Friday 2/13/09 the July futures contract was down 2.25%. But DXO went down 6.72%, well more than twice that amount. (OLO down 3.38%) Meanwhile, on Friday 2/13/09 the April contract was down 0.17%, but DTO went up 2.57% on the same day. (SZO up 0.94%). So why are the results for DXO/DTO so different from what the connected futures contracts are doing? If you can explain anything to me here, thanks in advance. -------------------------------------------------------------------------------- Posted by MacDRider on 02-16-09 05:26 PM: I called Invesco PowerShares and asked them about the above. Basically, he said that the differences were due to trading on DXO/DTO outside of the futures trading hours. He said that the price should remain faithful to the futures while futures trading is going on, but that the price of DTO/DXO will change based on fundamental buying and selling outside of futures trading hours. I didn't have a ton of confidence in the things he was saying in general, but DXO I have seen does trend right along with the July crude contract during the hours for futures trading. -------------------------------------------------------------------------------- Posted by MacDRider on 02-17-09 03:53 PM: -------------------------------------------------------------------------------- Quote from MacDRider: I called Invesco PowerShares and asked them about the above. Basically, he said that the differences were due to trading on DXO/DTO outside of the futures trading hours. He said that the price should remain faithful to the futures while futures trading is going on, but that the price of DTO/DXO will change based on fundamental buying and selling outside of futures trading hours. I didn't have a ton of confidence in the things he was saying in general, but DXO I have seen does trend right along with the July crude contract during the hours for futures trading. -------------------------------------------------------------------------------- I called them again because I didn't have any faith in the guy answering the question, and the person I spoke to today gave me what is probably the correct answer. He said that these ETNs only track the futures basically (plus a little bit in T-Bills), so the price moves are pretty much only based on the movements in the futures contracts on a nearly 24 hour basis (23 1/2 hours to be exact). I also asked him about how to determine things like the new principal amount for each month, as explained in the prospectus, and he refused to answer the question (didn't know). He said I could call Deutche Bank at 877-369-4617, but said they weren't likely to tell me either. He says the shorts like DXO reset to their new contracts every 2nd - 6th of the month. For example, from the 2nd to the 6th of March it would change by 20% per day from the April contract to the May contract. The long also changes on the 2nd - 6th the same way, but the longs have been tracking the July futures since the beginning. This means the long contracts won't change for DXO until the 2nd - 6th of June, but I don't think they know yet (?) which contract it will change to from the July futures contract at that time.