SCO May Offer Outsized Returns, But Extreme Caution Is Urged

Robert Boslego 5.75K Followers Follow Summary ProShares UltraShort Bloomberg Crude Oil ETF offers -2x daily inverse exposure to WTI crude but has lost ~99.5% of value over 10 years. SCO is unsuitable for most investors due to extreme volatility, a high expense ratio (0.95%), and poor long-term performance but may present a tactical opportunity. Geopolitical turmoil, especially the Iran-US conflict and Strait of Hormuz disruptions, keeps oil prices elevated; resolution timing remains highly uncertain. I am monitoring December 2026–January 2027 for a potential SCO entry, contingent on clear evidence of world oil inventories bottoming and rebalancing. asbe/iStock via Getty Images The Exchange-Traded Fund ( "ETF ") is a leveraged short position in crude oil. ProShares states , "SCO seeks daily investment results, before fees and expenses, that correspond to two times the inverse (-2x) of the daily performance This article was written by Robert Boslego 5.75K Followers Follow Managing Director, Boslego Risk ServicesHarvard College, Economics (Honors), BA Undergraduate thesis: "OPEC Pricing Strategy." Harvard Business School Case Study: "Industrialized World and Oil."Stanford University Graduate School of Business, MBA I founded Boslego Risk Services and became a recognized expert in the area of energy price risk management (hedging) and trading, providing oil and natural gas hedging strategies to major oil companies such as Exxon, Shell, Mobil, Chevron, Texaco and Phillips; to the national oil companies of Norway, Venezuela, Mexico, Canada, France and Italy; to major users of energy products, such as Delta Airlines, United Airlines, Burlington-Northern Railroad, and Canadian Pacific Railway.I also provided frequent market assessments and recommended trading positions to major trading firms, such as Enron, Phibro, Sempra and Vitol, and to large hedge funds.As the recognized expert in energy hedging, I was selected by the former president, John Treat, of the New York Mercantile Exchange (NYMEX) to write the chapter on hedging in his book, Energy Futures (1990, 2000). Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.