Bears Are Circling Beleaguered Energy ETFs (XOP)

Today in our ETF/Index options recap, we profile the largest “Oil and Gas Exploration and Production” ETF once more, thanks to a plunge in the underlying stocks and interesting options activity in the name, XOP (SPDR S&P Oil & Gas Exploration & Production, Expense Ratio 0.35%, $1.9 billion in AUM).

On renewed weakness in the name today after a brutal last week, we have seen an appetite for June 32 puts (XOP is trading at around $33.30 at the moment and its 52-week low is $32.21).

Fund flows have still leaned positive in XOP, in spite of the under-performance lately, as XOP has net pulled in about $50 million year-to-date. This puts the fund at about five times the size as the next largest ETF in the space, which is IEO (iShares U.S. Oil & Gas Exploration & Production, Expense Ratio 0.44%, $396 million in AUM).

The recent action in XOP puts also has us watching a lesser known but potentially useful Leveraged Bear product in the space known as DRIP (Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X, Expense Ratio 1.10%, $18.9 million in AUM). DRIP tracks the same underlying index as XOP, only incorporating a three times daily inverse effect for traders and aggressive speculators in the space.

DRIP’s sister fund GUSH (Direxion Daily S&P Oil & Gas Exploration & Production Bull 3X, Expense Ratio 1.10%) is considerably larger at the moment than DRIP with $138 million in AUM, but is suffering in terms of performance thanks to the swoon in Energy equities.


The SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) was trading at $33.11 per share on Tuesday morning, down $0.82 (-2.42%). Year-to-date, XOP has declined -20.06%, versus a 8.07% rise in the benchmark S&P 500 index during the same period.

XOP currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #21 of 38 ETFs in the Energy Equities ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.