Well the Agriculture ETF (DBA) popped on the open and I sold it. I got a split fill with half at $27.95 and half at $28.00. I looked a few minutes later and it was at $28.10. Right before I published this post I saw $27.85.
Based on what I have seen I did not think DBA lent itself to a stop order, it was up $0.90 on the opening print today. I plan to own it again but I am not sure when. I was very surprised it moved so much in such a short time and while I intended to hold it I decided to take the trade for now.
A reader emailed me an interesting question; he wanted to know if the listing of the fund, so the buying if the four components, could have pushed prices up.
While anything is possible I think the answer here is no. The total volume since DBA listed is just under 2 million shares or about $50 million, give or take. If we were to assume that each share traded was newly created to meet buyer demand, which is no doubt a faulty assumption, then you are talking about $12.5 million going into each of the four components. I don't think that kind of money could move the spot prices by that much.
Wikinvest Wire
10 comments:
Prob. not much effect yet. There are some who proclaim that the gold etfs have had an effect on the price of the bullion.
How lucky...could the poor farmers be to have their grains bid up by "hungry" investors?
Believe me, it would be a true blessing.
You are probably right about stops as I just got punted out and I had a huge stop set up.
Newly traded stuff. Interesting to see this one six months out.
dnf
I just saw a 26.38 print. cripes, it is a hot potato.
Man alive, who mixed in the hot pepper's with the cornbread? But if it drops a bit more I think I'll pick up a very small slice to test for flavor over the next couple quarters.
yeah? or until settlement date?
(LOL) maybe sooner if it keeps moving around like this!
More seriously, I find I get a better feel for an asset when a few bucks are involved and I'm actively tracking, updating ROI, getting shareholder literature, etc. Not that I don't trust the data services to be accurate mind you. In this case I'm trying to understand an asset class and how to best access it; e.g., I also picked up (very) small pieces of DBC and DJP because I'm also curious about the practical differences between ETF and ETN structures.
so, any conclusions yet on the differences between ETF and ETN structures?
Think I'll have a better answer when I see if the ETN grantor trust status holds up with the IRS ...if the IRS won't accept the K-1 form from Barclays then, well (shrug); OTOH if it does stand up then ETN's will have a very strong tax advantage because, as I currently understand it at least, the bulk of any gains or possibly even all gains can be treated as ROC.
Otherwise they seem to track very similarly within the bounds of the differences in their respective indexes so, thus far at least, the difference may not matter much in a tax-deferred or ROTH account. Not really enough data to tell yet I think, these things haven't existed long enough.
Nice trade Roger. You made clients 2.00 more by selling DBA this morning.
This quote was posted on The Commodity Trader blogsite.
"With the recent announcement by the USDA that corn harvesting is going to be 20% below expectations in the United States, corn contracts on Friday exploded, reaching their daily price gain limit, and sending DBA up 7% for the day."
I don't recall seeing this explanation mentioned anywhere in the discussion of DBA's price action here on RRBP. It may mean that to make money with DBA, we have to keep track of news affecting the underlying markets.
So far, without news (and weather), DBA's price action is incomprehensible. That makes it anything but a "set it and forget it" investment.
Post a Comment