As the threat of regulation bears down on certain ETF’s, some have already begun to wind down out of fear.
For example, Deutsche just announced they would shut down their ProShares Crude Oil Double Long ETF (DXO).
Yet as ETF’s such as DXO come to an end, their unwinding could offer profitable opportunities for astute traders.
FT: The WTI positions held by the DXO are in July 2010, therefore they will have to sell about 11’000 July WTI contracts (a third of the July2010 Open Interest). While this will have a flat price impact next Wednesday we think it is too early to already pre-emptily sell in front of it. We would rather buy the WTI spreads to July 2010 as we would imagine that Deutsche will buy the spreads to bring the flat price length closer to the front to find enough liquidity for the liquidation of the Fund.
One would imagine that many winding-down ETF’s might present similar opportunities.