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I tried it in the beginning. But buying options was always a loss, and I quickly switched to only selling.
Even if I was right i almost always lost with buying options.
As stated earlier, NGH calls in my opinion are the most dangerous single options to sell. A severe cold blast or the appearance of La Nina (current probablility according to a weather service: 67 %) will bring NGH price to $4 or $5 or higher. Volatility will explode. Of course - in case the winter in Northern US will be warm the options will expire worthless. But risk / reward is not acceptable in my opinion.
Have a look at the NGH chart for early 2014. If I remember correctly there is a comprehensive documentation of what happened to NGH call sellers in this year in Ron's thread.
I am long the NGH futures for some weeks and covered 3/4 of them with NGH C3.6 .
The 2014 cold blast did a severe damage to otm call sellers. However, that kind of situation has been removed from the system risk completely. Never dream the same nightmare.
The market of natural gas is dominated by giant players. After 2013/2014 cold blast, there are new regulations came out for transparency. Now these giant players need to provide data every for a while, which eliminated that kind of risk of 2014 cold blast.
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It is correct the CFTC post-'Dodd Frank' did bring in additional position reporting, I'm not sure of the actual effective date, but I thought it was pre-Winter 13/14. Even if it was after that, I wouldn't have the confidence that nothing similar could happen again. FYI if you think Winter 13/14 was bad, go back and look at some of the earlier years! As already mentioned, Vol is probably more dangerous than Price.
