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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: 4,386
Thanks Received: 10,206
I was joking.
CafeGrande posted the image below which implies a 2 Std Dev move in NGH would be $7. I was making the joke that people could safely sell the $7 call. In reality I'm one of the last people that would recommend that a non very experience NG trader short NGH calls. A lot of money made and lost here last year on March NG Calls - some interesting reads if you have time.
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: 4,386
Thanks Received: 10,206
Forecasts all shifting colder... Dec Futures have rallied 50+c in the last 6 days.
If you think that's significant - physical gas for the balance of the month delivered to Algonquin (aka Boston) - the most expensive and volatile gas in the country - was up $1.70 today to $8.30!
And I was kidding about adding a side order of (short) soybean meal calls, which have also increased significantly in price and in implied volatility recently. The plane ticket reference is from an old trading joke - the "O'Hare Hedge" - where you put on trades you can't afford and then buy a ticket to Rio or someplace that doesn't have an extradition treaty with the US.
If the trade goes your way, you have a great vacation and come back a hero. If it doesn't, you're broke and can never return home, but at least you can live out your days in a tropical country.
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: 4,386
Thanks Received: 10,206
This is an interesting piece from the Washington Post about how Typhoon Nuri and the Arctic Oscillation look to be about to bring an early blast of cold to the US.
One thing you need to remember is that not only is Natural Gas a real commodity, with real supply and demand, but it's also an essential commodity. If we run out of natural gas, power plants shut down and houses go dark, grandma's heater doesn't …
One issue I have found after doing this for 2 years is that lower premiums require selling more contracts, and when a trade like that goes bad, it can get ugly quickly.
I think at one point last winter I was short 70 Nat Gas calls, and most of them were sold with low premium. I narrowly escaped that.
Instead of 25 at .03, I'd look for 15 at .05 or something like that, if it can be done. Roughly same amount of premium, but you'll be glad you kept the number of contracts small.
