President Trump’s One Big Beautiful Bill could energize leveraged ETFs that can capitalize on the strength of the oil and gas industry. That is, of course, if they continue exhibiting upside through the rest of the summer.
The bill itself aims to create a regulatory environment that’s more conducive to the oil and gas industry. More specifically, it opens up federal lands and bodies of water to oil and gas drilling. Furthermore, it mandates 30 lease sales (at least two per year for the next 15 years) in the Gulf of America. That effectively reverses the previous administration’s mandate to curb fossil fuel drilling.
“This bill will be the most transformational legislation that we’ve seen in decades in terms of access to both federal lands and federal waters,” said Mike Sommers, president of the American Petroleum Institute.
Of course, there will be many other fundamental factors that will drive oil prices in the short-term horizon. OPEC production decisions, geopolitical events occurring in the Middle East, and tariff uncertainty will continue to be price drivers. This could add to the volatility, but that spells opportunities in a few funds from Direxion.
2 Broad Sector Plays
Two plays come to mind when considering a play on rising oil prices: the +Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares+ (GUSH ) and the Direxion Daily Energy Bull 2X Shares (ERX ). Both offer traders broad sector plays that speak to the benefits of ETFs, including the ability to double up their exposure. If traders’ bullish notions are strong on oil and energy in general, these are the funds to consider.
GUSH tracks the S&P Oil & Gas Exploration & Production Select Industry Index with the obvious kicker of 2x leverage. ERX follows the Energy Select Sector Index (IXETR) with 200% exposure as well. The index includes domestic companies operating within the energy sector; more specifically, oil, gas, and consumable fuels; and energy equipment and services.
Traders looking specifically at oil and gas exploration will see GUSH as the ideal play, as close to 75% of the fund tilts toward that subsector. If Trump’s bill is to bolster domestic oil production, GUSH could be a bullish play.
On the other hand, ERX is an ideal play for traders specifically eyeing the big oil companies. Names like Exxon, Chevron, and ConocoPhillips comprise the top three holdings. As such, traders looking for exposure to industry giants in the oil industry will want to consider ERX.
Both funds appear to be trending higher again, following the broader market that’s back in the green after April’s tariff sell-off. Patient traders could continue riding the trend higher, but should always be wary if the trend reverses.
A Single-Stock Play
One company that’s been exhibiting strength despite the relative weakness in the energy sector is Exxon. Rising oil prices in turn could benefit the Direxion Daily XOM Bull 2X Shares (XOMX ). The fund is one of the latest in Direxion’s growing line of single-stock ETFs. These fund allow traders to double up on exposure to Exxon’s stock, thereby allowing for higher profitability if their bullish conviction is high.
As oil traders know, prices can fluctuate heavily. In turn, this can translate to similar price movements in the industry giants like Exxon.
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