I would have to write 20 pages of posts to explain trading in dairy futures and options. It is a totally different beast than almost all other commodities.
Biggest difference is that it is cash settled to the USDA price. So you are not trying to predict where futures are going. You are trying to predict the USDA price.
I have a Dairy Science degree. I worked for a dairy related company for 9 years. I owned my own dairy farm for 14 years after that. I have been trading dairy contracts for 16 years of the 18 years that dairy contracts have been trading.
Found out I could make more money and do it much easier than milking cows by trading. Sold the cows 13 years ago.
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I would add the explanation that what drives the winter NG madness is our storage situation, and even more importantly our perceived storage level at the end of winter. This is a obviously function of two things, how much gas is in storage going into the winter, and how much gas we use during the winter. The first we know, the second is completely dependent upon weather as @ron99 says.
NatGas (like electricity) is different than many commodities in that people's lives depend upon it. If we run out of cows we eat more chickens or pigs or veg. If we run out of Natural Gas.. power plants switch off... houses go dark & cold... people die. Sounds over dramatic I know but that's the reason you see the scarcity pricing in NG (and power) that you don't see in other commodities. (I don't have time to find it now but somewhere in this thread I posted a transcript of a PBS interview with Bo Collins before he became NYMEX President, where Bo's illustration of shortage pricing is a man in a desert without water.)
Another thing to remember is that the NG futures contract represents NG delivered in Louisiana. Prices where it was cold this winter (ie NE & Midwest) were significantly higher than the futures prices. Some next day cash prices got over $100/MMBtu and prices for some locations averaged over $20/MMBtu for the entire month.
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This is a true and valid point. But the farther options are out of the money and farther out in time the larger is VEGA. They are more susceptible to changes in IV. The last event saw a peak in OVX at 20.23 . (June 13).
Last August OVX peaked at 31.4. ( I believe this was the Syrian crisis.) When (and if) IV doubles the option
premium more than doubles. The actual premium increases somewhat geometrically. In addition the volatility skew
can hurt the short calls. These events are infrequent, but the risk is there.
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I note some strange behavior on LE V 138 Put. On 20/06 I sold LE V 138 Put @ 0,375 (delta was 0.08 and future = 148.72). Today when Live Cattle october future is about 155, 138 strike Put option price is 0.45 (delta = 0.07).