Saturday, February 12, 2011

Crazy gas prices lately? Protecting yourself and profitting with the gasoline ETF

As readers may have noticed, gasoline prices have had huge volatility recently. Yesterday the gas prices at my local station dropped 5%, a coupe of hours after I filled up of course.

Investors can profit or protect themselves against these price variations by using ETFs. A ETF for gasoline is UGA. It has shown considerable volatility.

The long term trend has clearly been up:


The volatility shows on on intra-day charts:


A very simple strategy to protect against increases in the price of gasoline is by buying UGA. UGA has gone up 16.9% this year.

In general, investors do not need downward protection, as that is simply reflected when they fill up. It's a very simple strategy.

We track all oil ETFs live here.

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