With Oil futures trading at negative prices yesterday, what happens to ETFs like USO that hold these contracts? If one buys such an ETF, is it possible to lose more than the price at which it is purchased, i.e. could it have a negative price, which the investor would be on the hook for?

1 Answer 1


No, because the fundamental cause of the negative oil price (limited storage of the physical good) does not exist for ETF. There is no cost to holding an ETF, so there is no reason that you would need to pay someone to take it (if it was worthless you'd just hold it)

Now the ETF itself could actually have no NAV (due to leverage and/or losing money on futures contracts) but the value of the ETF itself would not go negative - it would be similar to holding the stock of a bankrupt company.

  • 4
    Assuming an ETF starts out with positive Net Asset Value of 100 and ends up with negative NAV of -50, and assuming that all investors bought at a price equal to NAV when NAV was 100. Now, ETF price goes to zero, so the investors have "paid" for the loss of 100, but who takes the loss of the remaining 50?
    – NingNing
    Apr 21, 2020 at 17:55
  • 2
    Yet the underlying of said ETF (USO) is future contracts for the very same physical goods. The question here is whether holding an ETF bestows the same protection to holding shares of a stock, hopefully with credible citations.
    – Moobie
    Apr 24, 2020 at 21:28

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .