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I have a rule of closing when the potential loss hits a certain level - but in this case, I have ignored that rule. So am still holding. It's a very small position so I am not losing any sleep over it.
In fact, the whole energy sector has been very bullish, be it GC, CL, HO, or RB, and this is resulting in paper losses on some other trades that I hold. I am surprised that there has not been more discussion on this forum, cos I'm sure there are opportunities being thrown up by the recent bullishness.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
Good luck to you. NG has a had a decent move the last few weeks. I'm not sure what to think from here. Still need to see how the fundamentals pan out. Looks like we are going into winter with the least amount of storage in over a decade (by quite a lot, 9-10%!) - of course that is partially offset by production being the highest it's ever been.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
ICE trades today
EIA 10/11 +93 ... which would be 10-15 BCF higher than usual
EIA 10/18 +82 ... which would be 10 BCF higher than usual
EIA 10/25 +61 ... which would be normal
End of Season 11/08 traded 3250 which is higher than I've seen some models but would still be 200 below 2008 which is the 12 year low.
I bought a few UNG Puts today and now I think I am in a bit of a difficulty... LOL
Thats why I got interested in this thread. LOL
Small position though, just trying new stuff.
@myrrdin @SMCJB would you guys know why the forward curve goes to backwardation from February?
I know it gets closer to spring season BUT with Natural Gas being as expensive as it is to store, I am surprised those prices are lower than current...
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,388
Thanks Received: 10,207
Nov-Mar US consumes more than it produces
Apr-Oct US produces more than it consumes
At the end of March, if we don't have enough gas in storage, prices (for March) are dictated by scarcity economics. On the other hand if we do have enough in storage, the gas left in storage becomes the first injection month for the following year.
This is why leading up to, and often in the Winter, March trades at a premium to April. As we progress through Winter though and it becomes more and more obvious that we will have enough gas, that premium decays and march often finishes below April.
March/April is known as the widowmaker. Amaranth & Motherrock are two well publicized hedge fund blow ups caused by March/April.
I haven't updated this chart in a year, but I think you will get the picture. (And yes those are $3 spread prices, not outright prices!)
In the energies I currently hold the following positions:
RBG-HOG
This trade is favored by the seasonal charts. I was stopped out of this trade with a loss some time ago, and re-entered yesterday. This is one of my most profitable trades over the years, although it is difficult to find the best time to enter.
RBJ-RBF, HOH-HOZ
Both trades are suggested by MRCI. Especially the chart for the HO spread follows the seasonal chart nicely since April 2018.
NGH-NGF
The spread reached an extreme level some days ago, and is now on its was back to normal. I was lucky to buy it on 4th of October with a very close stop below the most recent low. High risk trade - thus small size. I will exit immediately if the spread is beginning to move against me.
(CL Calls)
I bought back various CL call spreads last week with a nice profit.
