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Diversified Option Selling Portfolio


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Diversified Option Selling Portfolio

  #1491 (permalink)
Miami Florida United States
 
 
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myrrdin View Post
For me there are three simple rules in trading of Natural Gas options:

1. Do not sell options on Z, F, G, and H contracts.
2. Do not sell options on Z, F, G, and H contracts.
3. Do not sell options on Z, F, G, and H contracts.

As you might hve read in the energy thread, I begin to buy (!) some calls for the NGH future.

Best regards, Myrrdin

Yea, NG seems like a coiled spring but just keeps going down...way too much supply with lots of gas directed drilling in Appalachia and oil directed rigs in the Permian bring it up as a nuisance byproduct, they give it away for just above free at the Waha hub. I read a month or so ago the final leg of pipeline to Waha was being pressure filled and expected to start delivering to the regional interconnect SEP/OCT...I have noticed last two months price spikes around roll-over that only stick around for a day, I sold some calls yesterday when it was up over 3% and closed them out mid-day today for 60% gain..I get a kick out of how 10 different news feeds give 10 different reason for the move, some pretty creative explanations, none of them right, of course :-)

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  #1492 (permalink)
Market Wizard
Linz Austria
 
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llywelyn View Post
Yea, NG seems like a coiled spring but just keeps going down...way too much supply with lots of gas directed drilling in Appalachia and oil directed rigs in the Permian bring it up as a nuisance byproduct, they give it away for just above free at the Waha hub. I read a month or so ago the final leg of pipeline to Waha was being pressure filled and expected to start delivering to the regional interconnect SEP/OCT...I have noticed last two months price spikes around roll-over that only stick around for a day, I sold some calls yesterday when it was up over 3% and closed them out mid-day today for 60% gain..I get a kick out of how 10 different news feeds give 10 different reason for the move, some pretty creative explanations, none of them right, of course :-)

I bought some cheap NGH C3 some weeks ago, to speculate on a cold winter.

These options are financed by calls in the October and November contract. I had sold the NGV C2.5 and bought it back with a profit, and just today sold the NGX C2.5 with the intention to buy them back around 50 %.

Best regards, Myrrdin

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  #1493 (permalink)
Legendary Market Wizard
Houston, TX
 
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llywelyn View Post
Yea, NG seems like a coiled spring but just keeps going down...way too much supply with lots of gas directed drilling in Appalachia and oil directed rigs in the Permian bring it up as a nuisance byproduct, they give it away for just above free at the Waha hub. I read a month or so ago the final leg of pipeline to Waha was being pressure filled and expected to start delivering to the regional interconnect SEP/OCT...I have noticed last two months price spikes around roll-over that only stick around for a day, I sold some calls yesterday when it was up over 3% and closed them out mid-day today for 60% gain..I get a kick out of how 10 different news feeds give 10 different reason for the move, some pretty creative explanations, none of them right, of course :-)

Waha (and Permian) earlier in the summer actually traded negative, meaning you couldn't give it away for free you actually had to pay somebody to take it. (For example Waha May Gas Daily Average final settlement price was -$0.2368). Since then though prices have recovered significantly. Permian and Waha for Sep are both around $1.30. These are obviously still very discounted as 600 miles west, Houston Ship Channel for Sep is $2.19 and Henry Hub is $2.26. In comparison the most expensive gas in the country? Socal Citygate (think Los Angeles) is $2.95 and PG&E (think San Fran) is $2.77.

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  #1494 (permalink)
Hanoi, Vietnam
 
 
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Hi,
I am looking for a good source for soft commodities data, mainly coffee and cocoa. I've read that few years before it was suggested to get info via the ICE soft news document that was published monthly, but then since sometime in 2017 they discontinued that report and recommended "J Ganes Consulting" reports instead.

I took a look and it seems quite expensive. Can anyone please recommend me any other good source? Im so used to getting fundamentals from USDA (everything from supply demand crop progression to exports...), I know it will be hard to find something similar for coffee and cocoa, but anything useful will be a great help.

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  #1495 (permalink)
Market Wizard
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yurahoang View Post
Hi,
I am looking for a good source for soft commodities data, mainly coffee and cocoa. I've read that few years before it was suggested to get info via the ICE soft news document that was published monthly, but then since sometime in 2017 they discontinued that report and recommended "J Ganes Consulting" reports instead.

I took a look and it seems quite expensive. Can anyone please recommend me any other good source? Im so used to getting fundamentals from USDA (everything from supply demand crop progression to exports...), I know it will be hard to find something similar for coffee and cocoa, but anything useful will be a great help.

The ICE document was written by J. Ganes Consulting.

Th only other publication I know is the Hightower Report.

Additionally there is a discussion forum for coffee: https://mb.boardhost.com/coffeetraders/index.html?1563717561

Best regards, Myrrdin

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  #1496 (permalink)
Hanoi, Vietnam
 
 
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SMCJB View Post
Production? They are producing so much gas in some area's of the country they have quite literally been giving it away the last few months. (Why? Isn't enough transport available to move the gas out of production areas)
Lot more onshore production is true, but we have also discovered (painfully) that Hurricanes tend to cause more demand destruction than they do supply destruction!

Hello, can you please explain to me why this year the production (weekly inflow) is higher than other years? I took average of weekly NG storage inflow of (1st week of Sep + 4 weeks of August) for the past 7 years, and I see that this year during this time average inflow is definitely higher than some years, but at quiet the same level as Sep 2015 and lower than Sep 2014.
My point is that why they cant lower production? In 2014 and 2015 they produced at the same level, but in other years such as 2016, 2017, 2018 the average weekly inflow during this time was lower. Im aware that there was a big difference in total storage at that time and they decided according to that, but somehow from your response I understood that they dont really have a choice but to keep producing (thus giving away)? Please correct me if Im wrong, Im still learning about fundamentals.

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  #1497 (permalink)
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yurahoang View Post
My point is that why they cant lower production?

A lot of it is 'associated gas' meaning that when you drill an oil well you actually get oil plus 'associated gas'. So in order to lower production they would also need to lower oil production and they don't want to do that. 'Associated gas' is normally 'wet gas' which also yields a lot of Natural Gas Liquids (NGLs ~ Ethane, Propane, Butane). I don't know what the economics are currently but there have definitely been times that you make so much money of the NGLs that you can lose on the Natural Gas (Methane) and still be ahead. Again another reason why they won't lower production (at times).

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  #1498 (permalink)
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yurahoang View Post
Hello, can you please explain to me why this year the production (weekly inflow) is higher than other years? I took average of weekly NG storage inflow of (1st week of Sep + 4 weeks of August) for the past 7 years, and I see that this year during this time average inflow is definitely higher than some years, but at quiet the same level as Sep 2015 and lower than Sep 2014.
My point is that why they cant lower production? In 2014 and 2015 they produced at the same level, but in other years such as 2016, 2017, 2018 the average weekly inflow during this time was lower. Im aware that there was a big difference in total storage at that time and they decided according to that, but somehow from your response I understood that they dont really have a choice but to keep producing (thus giving away)? Please correct me if Im wrong, Im still learning about fundamentals.

They haven't produced at the same level. Production was higher except for 2016 and first half of 2017. 2015 NG production was much higher than 2014. 2018 & 2019 NG production was much higher YoY. But demand was higher so net injections were lower for some of those years.

Go here and click on NG Dry Production Bcf/day to get monthly averages for US.
https://public.tableau.com/profile/ron.h8870#!/vizhome/Energies-MonthlyData/YearlyLineGraphs

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  #1499 (permalink)
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Currently I find it difficult to find short options trades. I am not invested in any one ...

There are some large moves, eg. currently in LCG and probably soon in KW-W. I prefer trading them via futures.

There are some major uncertainties, eg. in the Indices, in Hogs, or in Crude Oil. I do not like trading them via short options, too.

This shows how important it is to have a tool box of different trading strategies.

I am sure the time for short option trading will come again. Please feel free to write about your short option trading ideas, as soon as they appear.

Best regards, Myrrdin

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  #1500 (permalink)
Maribor Slovenia
 
 
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myrrdin View Post
Currently I find it difficult to find short options trades. I am not invested in any one ...

There are some large moves, eg. currently in LCG and probably soon in KW-W. I prefer trading them via futures.

There are some major uncertainties, eg. in the Indices, in Hogs, or in Crude Oil. I do not like trading them via short options, too.

This shows how important it is to have a tool box of different trading strategies.

I am sure the time for short option trading will come again. Please feel free to write about your short option trading ideas, as soon as they appear.

Best regards, Myrrdin

I am in the same boat as you.. Was short CL for a month and just closed a trade today. On friday I wanted to close it for a 50 % gain and I missed a price of 1 cent! Was greedy with a pre-set stop and,.. well. today I closed it for only 40 % gain instead of 49 % gain Anyway I closed it because graphs show global trade falling off drastically and a lot of uncertainties with china trade war, BREXIT etc etc so no short option positions for me from today on also..

will go back to short 40 crude put a about 6 months out again if CL falls off a cliff because I think crude is a buy down at 40 level, but currently not enough premium to warrant a position. If premiums become more juicy I am back in..

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