XOP (SPDR Oil & Gas Exploration & Production, Expense Ratio 0.35%, $2.2 billion in AUM) is the unabashed leader in the specific sub-sector within the greater “Energy Equity” category known as “Oil & Gas Exploration & Production,” which is populated by eight ETFs at the moment.
We tend to mention XOP in our daily pieces on a regular basis, because it is a quite popular fund given its asset size and daily turnover (over 18,000,000 shares traded daily on a trailing one-month basis), and its options market is quite liquid. In fact, we see notable trading in the name options-wise sometimes several times per month.
In attempts to capitalize on the healthy and growing trading interest in XOP, about two years ago in May of 2015 Direxion launched both GUSH (Direxion Daily S&P Oil & Gas Exploration & Production Bull 3X, Expense Ratio 0.95%) and DRIP (Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X, Expense Ratio 0.95%), which each trade respectable daily volume and have $108 million and $26 million in assets under management respectively at the moment.
Both funds, as their names suggest, are tied to the same underlying index as XOP and thus have become popular among hedgers and speculative traders whom are likely looking to capitalize on the gyrations and volatility in this segment which is often led by Crude Oil price volatility itself. One can look no further than a recent chart of Crude Oil futures prices and see more than a 10% rally in the commodity just since late March.
With increased tensions overseas on the heels of the Syrian crisis and no end in sight to the war with ISIS, it seems this volatility is here to stay for now and this should maintain a healthy appetite in the marketplace for XOP, GUSH, and DRIP.
The SPDR S&P Oil & Gas Explore & Prod. ETF (NYSE:XOP) was trading at $36.30 per share on Monday afternoon, down $0.03 (-0.08%). Year-to-date, XOP has declined -12.36%, versus a 4.52% rise in the benchmark S&P 500 index during the same period.
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.
Paul 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 ETFTrends.com 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.