How to play the oil market on a budget.

[WhiteWonder 2,172]

Hell yeah

[kilroy69 995]

Very nice. I hope this will be the climb to the 40s or 50s I expected to see when I started watching it.

[5-Points 2,734]

 

ProShares, the largest issuer of inverse and leveraged exchange traded funds, is planning to split 21 of its ETFs. Twelve ProShares ETFs will be split on a forward basis while nine will be reverse split.

 

“All splits will apply to shareholders of record as of the close of the markets on May 18, 2015, payable after the close of the markets on May 19, 2015. The funds will trade at their post-split price on May 20, 2015. The ticker symbol and CUSIP numbers for the funds will not change,” according to a statement from Maryland-based ProShares.

 

UVXY and UCO will be reverse split on a 1-for-5 basis while the other ProShares ETFs to be reverse split will do so on a 1-for-4 basis.

 

 

 

http://finance.yahoo.com/news/proshares-announces-splits-21-etfs-110014993.html

[mmmmm...beer 691]

 

 

http://finance.yahoo.com/news/proshares-announces-splits-21-etfs-110014993.html

WTF does this mean in 'mercican english? Explain...

 

Never... oh

What is a Reverse Split?

 

Reverse splits are the opposite of regular ETF splits, but do get a little trickier. Lets say you own 4 shares of an ETF that is trading at $10. Your total portfolio is worth $40 (4 shares x $10). Then a reverse two-for-one split is announced. So youre 4 shares become 2 shares (opposite of a regular split) and the price of each share goes to $20 (doubling). So your portfolio is still worth $40, you just have less shares.

 

What if the Reverse ETF Split Isnt Even?

 

In some cases the spilt may not be evenly divisible by the amount of shares in your portfolio. So again, referring to our example, if a three for one split is announced, three of your shares will go to one and your extra (fourth) share will actually be a third of a share after the reverse split. But since you cant have a third of a share in your account, you will get the cash equivalent for that third.

 

So using our example - you own 4 shares at $10. A three-for-one split is announced. You now own one share at $30 and a third of a share, which is theoretically worth $10 ($30 / 3). But instead of carrying a third of a share, you will just get $10 cash in your portfolio. So your ETF share is worth $30 and you have $10 in cash. Total value = $40 ($10 cash + $30 share). Total value is still the same post-reverse split as it was pre-split.

[5-Points 2,734]

WTF does this mean in 'mercican english? Explain...

 

Never... oh

What is a Reverse Split?

 

Reverse splits are the opposite of regular ETF splits, but do get a little trickier. Lets say you own 4 shares of an ETF that is trading at $10. Your total portfolio is worth $40 (4 shares x $10). Then a reverse two-for-one split is announced. So youre 4 shares become 2 shares (opposite of a regular split) and the price of each share goes to $20 (doubling). So your portfolio is still worth $40, you just have less shares.

 

What if the Reverse ETF Split Isnt Even?

 

In some cases the spilt may not be evenly divisible by the amount of shares in your portfolio. So again, referring to our example, if a three for one split is announced, three of your shares will go to one and your extra (fourth) share will actually be a third of a share after the reverse split. But since you cant have a third of a share in your account, you will get the cash equivalent for that third.

 

So using our example - you own 4 shares at $10. A three-for-one split is announced. You now own one share at $30 and a third of a share, which is theoretically worth $10 ($30 / 3). But instead of carrying a third of a share, you will just get $10 cash in your portfolio. So your ETF share is worth $30 and you have $10 in cash. Total value = $40 ($10 cash + $30 share). Total value is still the same post-reverse split as it was pre-split.

Sorry, I meant to get back to this yesterday but got sidetracked...

 

Looks like the price per share may hit kilroy's $40-$50 range sooner than he thought, at least temporarily, but your number of shares will be 1/5 of what it is now.

 

I've only been through one reverse split and it didn't turn out pretty. The PPS just plummeted and I wound up with fewer shares worth considerably less money.

 

That was a tech stock though, not oil. The idea is to reduce the number of outstanding shares, thereby increasing the value of those shares. Sometimes it works, sometimes it doesn't.

[WhiteWonder 2,172]

Generally with a reverse split I like to sell before hand And buy back after the initial price drop. Meaning the stock price changes due to the split but then drops once regular trading resumes. You see it a lot with reverse splits.

 

I'm not a stock guru so I can't really say why but I think a little has to do with some people seeing the big price jump and not understanding totally how a split works and selling what they thunk are massive gains. Some more has to do with people wondering why the company or etf is artificially raising the pps with a reverse split....

 

Apple had a regular split not too long ago. And I'm going to say bank of america had a reverse split maybe 5 or 6 years ago when I owned shares. I think theirs was 10 for 1.

 

 

So I'm basically guessing that once uco reverse splits, you're going to see a drop and buying opportunity before it continues its rise.

 

Right now a 10+ rise in the price of oil resulted in about a 5 dollar rise in uco price per share... so I'm also thinking that post split, another 10 dollar rise in oil price might net closer to a dollar for dollar rise in uco... just a guess though.

[5-Points 2,734]

Generally with a reverse split I like to sell before hand And buy back after the initial price drop. Meaning the stock price changes due to the split but then drops once regular trading resumes. You see it a lot with reverse splits.

 

I'm not a stock guru so I can't really say why but I think a little has to do with some people seeing the big price jump and not understanding totally how a split works and selling what they thunk are massive gains. Some more has to do with people wondering why the company or etf is artificially raising the pps with a reverse split....

 

Apple had a regular split not too long ago. And I'm going to say bank of america had a reverse split maybe 5 or 6 years ago when I owned shares. I think theirs was 10 for 1.

You can also short the stock after the r/s and make a little money that way. As you said, there will be an initial drop with people selling off after the split. Then you can buy back on the dip and enjoy the ride back up, if it comes. I'm not at that level though. I tend to buy and hold long term.

[WhiteWonder 2,172]

You can also short the stock after the r/s and make a little money that way. As you said, there will be an initial drop with people selling off after the split. Then you can buy back on the dip and enjoy the ride back up, if it comes. I'm not at that level though. I tend to buy and hold long term.

 

to me, the biggest factor here will be how the stock price moves up or down after the split. being that this is not an individual company stock but an ETF that tracks the price of oil, there is no way the gain and loss amounts will stay the same relative to the gain and loss amounts of the price of oil. When oil was at its peak last summer, UCO was at its peak in the 40's. thats like a 3rd the price of oil so obviously, not a dollar for dollar shadow of the oil market, as i mentioned before.

 

a 5-1 reverse split will put this stock close to the ACTUAL price of oil. But will we see dollar for dollar gains and losses as a result? my logical guess would be yes but i really have no experience with an ETF stock split.

[patweisers44 697]

trading at 49.50 today. Factoring in the reverse split, I am up almost 10 bucks a share here. I think I sell some (if not all) when oil hits 70 bucks.

[kilroy69 995]

That's what I like to hear.

[mmmmm...beer 691]

Well this isn't going to well... I'm down about $1100 right now. This is going to be a lonnnnnggg game.

[Big Guy 1,400]

Well this isn't going to well... I'm down about $1100 right now. This is going to be a lonnnnnggg game.

 

bummer......hope you didn't need that money anytime soon.

 

So jumping in now would be probably be a good thing...........how do I sign up?

[mmmmm...beer 691]

 

bummer......hope you didn't need that money anytime soon.

 

So jumping in now would be probably be a good thing...........how do I sign up?

 

Well getting into it, I figured it if lost it all meh. I only put in about $1750.

 

Oil is super low right now and yeah, it probably is a pretty good time to get in.

 

I just opened a trading account with my bank, and transferred the money in there from my savings account. Then I bought shares of UCO. It didn't cost me anything to trade. Pretty easy actually.