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4 Oil and Gas ETF Plays as Prices Stay Sky-High
Author: Nathan Reiff. Originally Published: 8/6/2026.
Key Points
- Persistently high oil and gas prices, driven by war in Iran, low petroleum reserves, and refinery shortages, have created varied opportunities across energy ETFs.
- Commodity-based funds like UGA and USOY have posted strong gains and yields this year, but carry risks from futures contango, leverage, or niche options strategies.
- Equity-focused funds such as PXJ and leveraged products like OILU offer alternative ways to target oil and gas exposure, ranging from buy-and-hold to short-term trading strategies.
- Special Report: Forget SpaceX. Buy the company Musk can't replace.
After six months of war in Iran and a long series of mixed signals about when the conflict might end, the oil market appears to be shrugging off some of its usual price drivers. At the same time, with the U.S. Petroleum Reserve at its lowest level in decades and a shortage of refinery capacity, there are plenty of reasons investors might expect oil and gas prices to remain elevated for the foreseeable future, even as the Trump administration will likely try to bring them down ahead of November's midterm elections.
The oil and gas industry is far from a monolith, though, and just because crude oil or gasoline prices are high does not mean that every investment in the sector is equal. Refineries have seen major gains, for example, as crack spreads have reached record levels. To gain broader exposure to the industry, investors may turn to exchange-traded funds (ETFs). Even then, there are plenty of options to choose from, each with a different approach.
Gasoline Futures Have Shot Upward, But There Are Risks as Well
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Click here to learn this company's name for free todayOne of the most basic ways to access the energy sector is through a commodity fund focused on crude oil or gasoline. The United States Gasoline Fund (NYSEARCA: UGA) is just that: It charges investors an annual fee of 1.08% to participate in a commodity pool that holds gasoline futures contracts designed to mimic daily gasoline price movements.
With average gasoline prices nationwide approaching a full dollar per gallon more than they were a year ago as of late July, UGA has similarly shot upward. The fund has returned about 80% year to date (YTD).
Still, investors seeking to benefit from rising pump prices should consider several factors. First, UGA's use of futures exposes it to the risk of contango, meaning the fund may be most appealing to those looking to invest over a shorter period. However, the fund's average trading volume does not support especially liquid trading. In addition, gasoline prices are not a proxy for the broader crude oil market, nor are they guaranteed to match gasoline's spot price because of the structure of the futures market. Despite the fund's significant gains this year, these risks may dissuade some investors.
A Layered Options Play on an Oil Commodity Fund
The Defiance Oil Enhanced Options Income ETF (NASDAQ: USOY) can be viewed as a variation on a commodity fund like UGA, although this ETF uses an oil fund as its foundation rather than a gasoline fund. With a high expense ratio—an annual fee of 1.12%—USOY provides indirect exposure to the United States Oil Fund LP (NYSEARCA: USO) while also selling at-the-money puts to generate income.
Layering an options strategy on top of a commodity fund adds complexity and risk, but USOY has delivered on its distribution goals, if not necessarily on share price appreciation this year. The fund's dividend yield of 61% has provided excellent income, although USOY remains highly niche and has a very modest asset base.
3x Leverage for Short-Term Bets
Those willing to take on an even greater degree of risk might look to a fund like the MicroSectors Oil & Gas Exp. & Prod. 3x Leveraged ETN (NYSEARCA: OILU). OILU takes the common energy ETF approach of targeting large companies engaged in oil and gas exploration and production as a proxy for crude oil prices, but it adds aggressive leverage that can compound returns in either direction.
Any leveraged fund requires caution, and a 3x fund in particular can amplify returns in ways that are highly risky for investors unprepared for this gamble. Like all leveraged funds, OILU is designed for short-term trading only. It serves as a tactical tool for investors seeking to maximize performance when they believe oil and gas producers' share prices will rise in a single day.
Even as the seesawing between ceasefire negotiations and renewed fighting in Iran has fatigued the market, geopolitical developments could still sway these prices. Investors willing to take a chance on timing those developments may be able to notch some wins here.
A Traditional Equities Approach With a Niche Sub-Industry Strategy
For many investors, a standard equities-focused fund still feels like the most secure bet. The Invesco Oil & Gas Services ETF (NYSEARCA: PXJ) focuses on around 30 U.S. companies in the oil and gas production, processing and distribution businesses. Similar in approach to OILU but without the leveraged component, PXJ may be the fund on this list most likely to appeal to buy-and-hold investors.
Still, the ETF's focus on oil and gas services companies leaves out some of the energy sector's biggest players, making it a more narrowly targeted strategy. Its value, then, may be greatest for investors expecting bottlenecks in the energy services subindustry as the broader sector adapts to shifting conditions. For an annual fee of 0.63%, this fund has returned a healthy 47% YTD.
Paramount’s 30-Film Promise Puts AMC Back in the Box Office Conversation
Author: Jeffrey Neal Johnson. Originally Published: 8/12/2026.
Key Points
- Paramount Skydance is offering exhibitors a binding three-year, 30-film annual theatrical guarantee to stabilize cash flow ahead of looming debt maturities.
- The guarantee's survival depends entirely on the proposed $111 billion Paramount Skydance-Warner Bros. Discovery merger clearing an antitrust trial scheduled for March 2027.
- AMC Entertainment and Paramount Skydance face financial pressures, including weak liquidity, margin compression, and a ticking fee that threatens Paramount's dividend.
- Special Report: Forget SpaceX. Buy the company Musk can't replace.
Theatrical exhibition has spent the last few years operating in survival mode. The physical economics of running a multiplex involve high fixed costs, including commercial real estate leases, utilities and specialized staffing. Those costs remain largely the same whether an auditorium is empty or sold out. When the pandemic disrupted historical release windows and subsequent Hollywood strikes choked the production pipeline, cinema operators were starved of the consistent product volume required to break even.
Paramount Skydance (NASDAQ: PSKY) is offering an unprecedented 30-film theatrical guarantee that could transform highly leveraged exhibition operators from distressed assets into fundamentally quantifiable businesses.
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Click here to learn this company's name for free todayBy establishing a legally binding product pipeline, this strategy addresses chronic product shortages. It offers battered cinema chains the precise operational baseline needed to service debt and capitalize on the entertainment sector's momentum ahead of a volatile antitrust trial.
A Binding Script for Box Office Stability
When analyzing businesses operating under heavy leverage, predictable forward cash flow is among the most valuable assets on the balance sheet. AMC Entertainment (NYSE: AMC) illustrates this dynamic. The stock has shown strong momentum, climbing approximately 57% since the start of the year and trading near $2.45. AMC Entertainment delivered a healthy 17-cent second-quarter earnings beat while generating approximately $1.6 billion in top-line revenue.
Despite this positive momentum, AMC Entertainment operates with a fragile current ratio of approximately 0.55. This liquidity profile presents a structural challenge because AMC faces a substantial debt maturity wall in late 2026.
Think of a debt maturity wall as a ticking clock, with a large portion of a company's debt maturing simultaneously. Businesses rarely pay off such obligations entirely in cash; instead, they refinance and roll the debt into new loans. To secure favorable refinancing rates, creditors need mathematical proof that the business will generate enough cash to make future payments.
Enter the proposed theatrical lifeline. Paramount Skydance Chief Executive Officer David Ellison is offering major exhibitors binding three-year contracts that guarantee 30 exclusive theatrical releases annually, split evenly between 15 films from Paramount and 15 from Warner Bros. Discovery (NASDAQ: WBD), assuming the proposed Warner Bros. Discovery merger eventually comes to fruition. The proposed terms mandate a strict 45-day exclusive theatrical window and a 90-day streaming moratorium.
During the pandemic, day-and-date streaming releases cannibalized box office returns, training consumers to wait for home viewing. A legally binding 45-day window encourages ticket sales, while the 90-day streaming moratorium reduces the immediate threat of at-home substitution.
For a highly leveraged operator like AMC Entertainment, this changes the fundamental modeling process. Analysts and creditors no longer have to guess how many tentpole films will reach the big screen. They can model baseline earnings before interest, taxes, depreciation and amortization against a guaranteed slate, using the contract as collateral to restructure those looming late-2026 debt obligations.
Directing Capital in the Streaming Era
The financial health of the studios issuing this guarantee requires close inspection to gauge the agreement's sustainability. Warner Bros. Discovery currently trades near $27. While Warner Bros. Discovery reported second-quarter earnings of 6 cents per share, beating the consensus estimate for a 14-cent loss by 20 cents, it still has a negative net margin of approximately 8.7%.
When evaluating media conglomerates, analysts typically prioritize free cash flow over standard net income. Studios spend hundreds of millions of dollars producing content upfront but amortize those costs over several years. This heavy amortization can artificially depress standard earnings metrics.
Warner Bros. Discovery has aggressively focused its free cash flow on paying down legacy liabilities, bringing its debt-to-equity ratio down to a manageable 0.90. This cash flow generation strategy provides a stronger fundamental valuation metric than net income, given the heavy amortization of content assets.
On the other side of the proposed $111 billion mega-merger is Paramount Skydance, whose stock has struggled, dropping approximately 31% year to date. Paramount Skydance faces severe margin compression and currently reports a negative net margin of approximately 2.13%.
Investors attracted to the roughly 2.18% dividend yield offered by Paramount Skydance should exercise extreme caution. Mounting legal fees for the upcoming antitrust defense are putting direct pressure on available cash. Regulatory delays have also triggered a unique ticking-fee mechanism.
Starting Sept. 30, 2026, Paramount Skydance must pay a 25-cent quarterly fee per share directly to Warner Bros. Discovery shareholders until the merger closes. This ticking fee creates an attractive institutional arbitrage opportunity in Warner Bros. Discovery equity, but it also introduces significant dividend-suspension risk for Paramount Skydance as cash reserves are depleted.
A Regulatory Plot Hole for Hollywood
The entire thesis for exhibition stabilization hinges on this mega-merger surviving regulatory challenges. A coalition of 12 states, alongside the Writers Guild of America, filed a sweeping antitrust lawsuit to block the transaction. The plaintiffs argue that consolidating major studios would reduce creative output and monopolize the labor market. A federal judge has scheduled the trial for March 2027.
This timeline creates a high-stakes binary event for the entertainment sector. The 30-film guarantee operates less as a traditional business partnership and more as a calculated strategic maneuver to secure exhibitor lobbying support. If major theater chains publicly testify that the merger would save their industry by guaranteeing product, it could significantly undermine the antitrust argument that the consolidation would harm the broader theatrical economy.
Institutional investors are not taking chances. Options chains for March 2027 expirations show market makers pricing in extreme implied volatility for both Paramount Skydance and Warner Bros. Discovery. Institutional funds are actively hedging against the possibility of a federal block. If the deal collapses in court, the binding 30-film guarantee evaporates instantly. That scenario would thrust theater operators back into product uncertainty, stripping away the cash flow predictability they desperately need to manage their approaching debt maturity walls.
Rolling the Credits on Sector Strategy
Navigating this sector requires a measured approach to risk and legal timelines. The contractual guarantee offers a rare, mathematically sound operational floor for the exhibition space, provided the merger clears the courtroom intact.
Cautious investors may prefer to monitor the early stages of the March 2027 antitrust trial before taking a significant position in exhibition operators, as their debt maturity walls leave little room for error. Those looking for more immediate, mathematically driven setups might consider Warner Bros. Discovery as an arbitrage play, leveraging the upcoming ticking-fee structure to generate yield while awaiting the final verdict.
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