UNG: http://finance.yahoo.com/q/bc?s=UNG+Basic+Chart&t=2y Hypothesis: UNG will rise to 24+ by Jan '15 Trade: with UNG at 20.17 Buy the Jan'15 20 call and sell the Jan '15 24 call for a net debit of $159 Price ...................P/L 15......................($159) 18......................($159) 20......................($159) 22......................$41 24......................$241 26......................$241 28......................$241 As people rush to take advantage of natural gas's cheap price it will eventually rise. http://www.bizjournals.com/twincities/news/2013/12/06/supervalus-new-trucks-are-powered-by.html But there is an awful lot of it and no telling when it will go up.
Tom, I'm afraid what you are trying to do is much more complicated then it looks. Natty could rise substantially and your UNG won't go up a single penny. You really need to get into futures and study the forward curve. Natty has some seasonality quirks to it based on the summer and winter demand seasons vs the spring and fall supply gluts. The ETF does a terrible job managing this. I think you would be better off looking for stocks that will benefit from higher nat gas prices. CHK was mentioned. LNG is good one in lng space.
I remember when i asked this exact question a long time ago when NG was just under 2 bucks.. I never did find an expression that made alot of sense to me...
Repeating myself, what exactly is the problem with trying to trade the swings? Why does it have to be long term? Do you eat all three meals in one sitting daily?
haha.. true.. it has to have a very small notional value to make sense for me to trade.. that's not so easy.. plus i don't like day trading or anything close to that time frame..
I've been looking at NG, good number line. But everyone is seeing the problems with a 6 month position. Will it go up over the next 2 weeks? What is the 5 day number line telling you? If it's good, can you make money over the next couple of weeks? Take that, then see what's next, and if NG is not as good as CL or a short on GC, move on. This business about a 6 month time frame in trading is like asking if my marriage will last forever. They didn't.