What's A Leveraged Oil ETF Trader To Do With UWTI And DWTI Set To Delist?

Oil traders will be losing a pair of the most popular leveraged trading tools this week. Credit Suisse has announced the delisting of the VelocityShares 3X Inverse Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return DWTI and the VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return UWTI on Thursday. Beginning on Friday, these two ETNs will trade on the OTC market only.

The two ETNs together had a combined $2 billion in assets under management (AUM), but they’re delisting likely has much more to do with increasing regulatory scrutiny of leveraged trading instruments than lack of popularity.

Now, traders will be left looking for alternative ways to trade daily swings in oil prices.

Alternatives

The most obvious leveraged alternative to DWTI and UWTI is the 2X-leveraged ProShares Ultra DJ-UBS Crude Oil UCO, which has more than $1 billion in AUM and an average daily trading volume of around 1.5 million. That’s plenty of liquidity for traders.

The sister fund of UCO is the 2X-leveraged inverse ETF Proshares Trust II SCO, which has over $130 million in AUM.

For traders looking for 3X exposure to oil prices, the best bet may be the Direxion Shares Exchange Traded Fund Trust ERX. ERX provides 3X leverage, but not to oil futures. Instead, it has more diversified exposure to the energy stocks within the S&P 500. Its sister fund, the Direxion Shares Exchange Traded Fund Trust ERY is the inverse option.