Betting on a Drop in Oil Prices with OILK and JETS

A recent trade on oil prices has yielded significant gains for investors, and now it's time to consider the opposite scenario. The ProShares K-1 Free Crude Oil ETF (CBOE: OILK) was used to profit from a spike in oil prices, which shot back up after hostilities in Iran intensified.

The call option on OILK that could be bought for $4 when recommended in July is now selling for around $10. The same ETF can be used to make money going the other way, but this time by betting on a drop in oil prices.

Another way to profit from a drop in oil prices is to buy shares of the U.S. Global Jets ETF (NYSE: JETS), which provides investors access to the global airline industry. Its top four holdings are United Airlines (NSDQ: UAL), Delta Air Lines (NYSE: DAL), Southwest Airlines (NYSE: LUV), and American Airlines (NSDQ: AAL).

Due to the inverse correlation between oil prices and airline stocks, OILK and JETS have moved in opposite directions this year. As a result, put options on OILK increase in value, as do call options for JETS.