NEW YORK - MacroMarkets LLC on Tuesday launched its latest investment products that allow investors to bet on the price of oil without influencing the market.
The MacroShares $100 Oil Up UOY.A and MacroShares $100 Oil Down DOY.A made their debut on the American Stock Exchange. They succeed two similar products that were launched in November 2006, but were liquidated after the relentless rise in the price of oil triggered termination parameters in April.
At the time of the liquidation last week the products had more than $1.5 billion in assets. The products are exchange-traded trusts which trade independently but are linked to one another. Assets are transferred on a dollar-for-dollar basis between the Up and Down trusts in accordance with moves in the futures contract on the NYMEX.
While the funds hold short-term Treasuries, overnight repurchase agreements or cash, investors make a profit or lose money according to moves in benchmark oil futures traded on the New York Mercantile Exchange.
Investors who bought the original MacroShares Oil Up UCR.A around the time of the launch on Nov. 30, 2006, when oil futures were about $60 per barrel, captured all of the upward move to $120 per barrel. Those who bought the MacroShares Oil Down DCR.A product and held it until the termination wound up with nothing.
Some users of the products have been institutions who were hedging long exposure to the price of oil.
The new products use a "reference value" for oil of $100 per barrel and have a termination trigger which occurs in the event that the futures close at or above $185 per barrel for three consecutive business days.
"We put a reference value in there based on market feedback as to where people would have interest on two sides," Sam Masucci, MacroMarkets president and chief executive, said in a telephone interview. "Although oil is significantly higher than that, lot of them do not think that price is sustainable."
The MacroShares $100 Oil Up UOY.A and MacroShares $100 Oil Down DOY.A made their debut on the American Stock Exchange. They succeed two similar products that were launched in November 2006, but were liquidated after the relentless rise in the price of oil triggered termination parameters in April.
At the time of the liquidation last week the products had more than $1.5 billion in assets. The products are exchange-traded trusts which trade independently but are linked to one another. Assets are transferred on a dollar-for-dollar basis between the Up and Down trusts in accordance with moves in the futures contract on the NYMEX.
While the funds hold short-term Treasuries, overnight repurchase agreements or cash, investors make a profit or lose money according to moves in benchmark oil futures traded on the New York Mercantile Exchange.
Investors who bought the original MacroShares Oil Up UCR.A around the time of the launch on Nov. 30, 2006, when oil futures were about $60 per barrel, captured all of the upward move to $120 per barrel. Those who bought the MacroShares Oil Down DCR.A product and held it until the termination wound up with nothing.
Some users of the products have been institutions who were hedging long exposure to the price of oil.
The new products use a "reference value" for oil of $100 per barrel and have a termination trigger which occurs in the event that the futures close at or above $185 per barrel for three consecutive business days.
"We put a reference value in there based on market feedback as to where people would have interest on two sides," Sam Masucci, MacroMarkets president and chief executive, said in a telephone interview. "Although oil is significantly higher than that, lot of them do not think that price is sustainable."
