Agreed with the others. If $1k is all you are playing with then just pick a stock that you think will either drop or go up in value in the next 3-6mos. Buy a few OTM calls/puts and call it a day.
I’m strongly thinking about gambling on some 6 mo RIM calls… but they have very low volume lately which is kinda sketchy
bullish oil sounds good but stay away from commodity ETF’s for buy-and-hold
If the drought continues then why not?
Commodity ETFs are tricky if you hold on to them for a long time. Generally they’re expensive because of the high transaction costs due to all the rolling over of contracts. Even if fees are okay you need to be aware of contango/backwardation issues.
Very similar issues as to why VIX ETFs suck.
Obvious Edit: These issues only apply to ETFs that buy futures. Commodity ETFs that buy the stock of commodity producers don’t face these issues. I’m sure that was obvious, but just wanted to put that out there before someone jumped down my throat.
Unless the curve is sloping down…
I guess there will still be transaction costs, but can’t be that much.
Look at something like UNG. It’s just under 1%. Depends on your definition of expensive, but it’s not cheap for an ETF.
And you’re right, as long as you’re in backwardation it’s okay, but “normal” backwardation doesn’t really exist anymore. Oil and gas are in contango more often than not now, agriculture and base metals all over the board, and gold and silver are almost never in backwardation (but when they are it’s easy money).
I’m just saying it’s something to be aware of and makes long-term investing in commodity ETFs trickier than it seems.