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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,268 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old December 11th, 2013, 04:13 PM   #2521 (permalink)
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I just talked to someone who is in the NG well business. He drills and owns wells.

He said he didn't have a clue why it was this high.

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Old December 11th, 2013, 04:28 PM   #2522 (permalink)
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Wow... the NGH14 7.00 strike price going for a 0.07 premium.

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Old December 11th, 2013, 04:33 PM   #2523 (permalink)
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Ouch, just woke up here in Aus and checked my NG positions. Not a good start to the day. I ended up buying back half of my Feb 5.2s and then went on to sell some Mar 6.5s for 0.013.



This has been my first losing trade for the year. Bugger. This is purely from following the methodology that Ron uses, more or less.

A big difference i have noticed is my approach to the loss. Previously i would just dump and run and get out of the position. This time i am more looking to manage the loss and looking for opportunities that the rise in NG has given to try and recoup those losses.

I think i remember Ron posting a few weeks ago that he was selling NG Puts and i thought, why would he being doing that NG will probably go down. I should have taken notice of the master!

Bakes

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Old December 11th, 2013, 04:41 PM   #2524 (permalink)
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just sold some Mar 7.00 @ 0.008

thanks for the heads up

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Old December 11th, 2013, 04:45 PM   #2525 (permalink)
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Futures Edge on FIO

Bakes View Post
Ouch, just woke up here in Aus and checked my NG positions. Not a good start to the day. I ended up buying back half of my Feb 5.2s and then went on to sell some Mar 6.5s for 0.013.



This has been my first losing trade for the year. Bugger. This is purely from following the methodology that Ron uses, more or less.

A big difference i have noticed is my approach to the loss. Previously i would just dump and run and get out of the position. This time i am more looking to manage the loss and looking for opportunities that the rise in NG has given to try and recoup those losses.

I think i remember Ron posting a few weeks ago that he was selling NG Puts and i thought, why would he being doing that NG will probably go down. I should have taken notice of the master!

Bakes

I sold more calls than puts. I am feeling a lot of heat too.

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Old December 11th, 2013, 05:10 PM   #2526 (permalink)
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ron99 View Post
I just talked to someone who is in the NG well business. He drills and owns wells.

He said he didn't have a clue why it was this high.

Maybe be they are hedges because of the situation in Ukraine, at least here in Europe?

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Old December 11th, 2013, 05:36 PM   #2527 (permalink)
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rani View Post
Maybe be they are hedges because of the situation in Ukraine, at least here in Europe?

There is almost no imports/exports of US NG. So world situations have no affect on US NG prices.

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Old December 11th, 2013, 05:38 PM   #2528 (permalink)
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ron99 View Post
It sure looks to me like manipulation is going on in NG futures now like it did in April 2013.

Last April the price shot skyward. Far too high. And then it dropped 30 cents in one day.

This morning at 8:15am ET NG was down .060. Then it jumped up 15 cents from there. This pattern of down overnight then rising late in the morning has been happening several times lately. Strange.

The long range US weather forecasts have normal to above normal temps for the majority of the country 8-14 days out. US oil production hit a new 25 year high last week. So wells aren't being hampered much by the cold weather.

But as the saying goes, "the market can be wrong longer than you can hang in there" certainly applies here.

The new weather models come out mid-morning. This mornings model showed an 11-15 day colder than it did yesterday. Note that it's not necessarily important as to how cold that actually is, but that the forecast got colder day on day. I believe that was the catalyst for NG swinging from negative to positive this morning.

For what its worth...

In the EIA report released Thursday 14th November for week ending Friday 8th November we had 3,834 BCF of Natural Gas in working storage. This was 80 BCF lower than the same week last year and 58 BCF above the five year average.

Tomorrow we expect the EIA to announce stocks dropped 90 BCF in the last week to 3524 BCF which would be 282 BCF below last year and 145 BCF below the five year average.

Observation >> in the last 4 weeks we have depleted Natural Gas storage by about 200 BCF more than normal for this time of year.

Natural Gas Prices for physical Delivery TOMORROW
(These are real prices for physical gas that is going to flow down a pipeline, not some financial product)

Northeast
- New England $20.29 (Algonquin)
- New York City $17.10 (Transco Z6)
Gulf Coast
- Louisiana $4.23 (Henry)
- Houston $4.19 (HSC & Katy)
Mid-continent
- Chicago $4.58
West
- San Fran $4.71 (PG&E)
- Southern California $4.72 (Socal Border)

Observation >> All of these prices were set this morning before prices rallied. Futures prices are in line with Gulf Coast supply area spot physical gas prices. Spot physical prices at market areas are considerably higher than supply areas/futures prices.

I'm not saying that prices should go up, just saying that there is a strong argument that fundamentals support current Natural Gas Futures Prices.

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Old December 11th, 2013, 05:49 PM   #2529 (permalink)
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Something else effecting the market is the huge selling in Cal 14 and Cal 15.
When Cal 14 rallied thru $4 last week it traded three times its normal trading volume on ICE.
I believe this is why we have seen the Jan14-Apr14 spread widen almost 15c in the last week.
If there wasn't the selling in the back I suspect the curve in general would be even higher, and probably the prompt as well

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Old December 11th, 2013, 05:59 PM   #2530 (permalink)
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SMCJB View Post
Natural Gas Prices for physical Delivery TOMORROW
(These are real prices for physical gas that is going to flow down a pipeline, not some financial product)

Gulf Coast
- Louisiana $4.23 (Henry)
- Houston $4.19 (HSC & Katy)

Observation >> All of these prices were set this morning before prices rallied. Futures prices are in line with Gulf Coast supply area spot physical gas prices.

Futures prices are 7 to 11 cents higher than GC prices.

Here is the NWS 8-14 day forecast from yesterday
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Here is today's 8-14 just released.
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I would call that a warmer forecast.


Last edited by ron99; December 11th, 2013 at 06:49 PM. Reason: Had wrong map
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