Investment Thesis on Day Trading Oil Pro/Short ETFs

Utilizing Oil ETFs to Capitalize on

Market Fluctuations
Jason Ye

Overview
Oil has long since been a major component and influence in the stock market as it is an important
commodity to the health of the global economy. However, the dramatic 60% loss of oil prices
(from roughly $100 per barrel to $33 per barrel) since June 2014 has greatly increased coverage
and the significance of oil prices as a benchmark for the health of the global economy. Fluctuations
in oil prices significantly affect many businesses across a wide spectrum of various industries.
Although lower oil prices are typically associated with increased profitability of non-energy
sectors, this thesis will focus on oil prices as a reflection and significant influencer of market
direction.

Historical Background
The overall drop in oil prices can generally be attributed a culmination of multiple factors. One
significant factor is the major slow down of global economies in 2014 after significant demand and
economic expansion inflated oil prices to over $100 (per barrel). The significant slash in oil
demand helped to contribute to a freefall of oil prices. In addition to global slowdowns, oil
production in the recent years have also greatly increased, increasing competition in the global
markets. Typically, oil market share has always been dominated by OPEC countries such as Saudi
Arabia. Increasing competition has forced oil

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