Ceasefire Talks in Libya: How to Trade (OIL, USO, SCO)

The details are still unclear but Colonel Moammar Gadhafi has reportedly accepted a ceasefire plan brought to him by the African Union.The ceasefire calls for an immediate end to hostilities from the forces of each participant including forces loyal to Colonel Gadhafi, the rebels and NATO.The ceasefire also seeks the protection of all foreigners still in Libya, talks between Colonel Moammar Gadhafi's government and rebel leaders, and calls on the Libyan government not to interfere with humanitarian aid deliveries.The plan was presented by a group of representatives that included the leaders of South Africa, Mauritania, Mali and Congo-Brazzaville, and the foreign minister of Uganda.However, it's not certain whether or not Gadhafi will be stepping down. If the Libyan leader plans to stay on, it's unlikely that rebel leaders will accept the peace plan.It should also be noted that in Africa once someone is in power other African leaders are usually loathe to call for his ouster, regardless of what he did to get into power or what he did while in office, and have a long history of protecting their own.Many members of the African Union may also have concerns that are much different than those of the Libyan people, as Gadhafi has offered a great deal of "financial support" to other African leaders and his forces are supported by mercenaries from other African nations.Even if both sides agreed to a ceasefire, it's not certain that Gadhafi would actually adhere to it. Last month after the United Nations approved a no-fly zone over Libya, the Libyan government immediately said that it was implementing a ceasefire.However, government troops pressed forward, trying to take advantage of the momentum they had against the ill-equipped rebels before foreign intervention could take place.Depending on how all this plays out, there are several investment opportunities.If the ceasefire is rejected by the rebels or both sides agree to a ceasefire in public but continue fighting, the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) and the United States Oil Fund (NYSE: USO) are two investments that could provide solid returns.If the ceasefire talks turn out to be more than just talk and lead to stability in Libya, the ProShares UltraShort DJ-UBS Crude Oil (NYSE: SCO) ETF that could easily see its share price on the climb.