general global macro considerations or anomaly I spot in the market, for gas was the fact that Amsterdam gas was rallying like crazy while the henry hub was still not reacting much and of course the expected extent of the Ukraine conflict and potential supply distruption
Sounds like you were correct with the premise but the timing of the trading vehicle's response was how do you say - suboptimal? How much time passed between the time the Amst rallied and when HHub caught up to a point where it reached profitability?
dutch ttf reacted immediately after the invasion doubling up its price in 3 days, it took 2 weeks for HB to start the rally, plenty of time, and the bet was that the american gas would substitute at least partially russian gas for europe due to sanctions. I played cheap not buying longer calls and expecting the HB to follow shortly. Missed a 25x trade
to test the suggested strategies I am currently paper trading 2 long calendar spreads on gold, one using same strike, the other one by purchasing a higher strike longer call. lets see the payout ratios
That was a fine analysis of the situation but as they say 'the market can stay foobar longer than a trader can stay solvent'. For whatever reason, that breakout did not occur in NG until March 22. Maybe a couple of simple price action setup triggers in your back pocket would prevent burning premium until the underlying shows a sign of strength like closing above prior swing high?
spent 10 yrs and money on TA, doesn't work for me, too much false signals and noise, Even to validate fundamental indicators, it is intellectually challenging and has fascinated me but i decided not to include it in my decisions. I like to keep my conclusions as simple as possible, limiting the amount of news and pre digested analys and based as little as possible on prices
true that is why i like options, not to expose large amount of capital on stubbornly fighting the market, we all experience periods where our approach pay off and others dont, i try to push the gas when it seem to work and stay away from market when there is little or no action or i am not profiting
I feel like you should really get deeper into options. Playing these kind of scenarios you described are perfect for them, not just because you limit your risk but also because you can tailor your risk profile to expectations. There are so many more possibilities and so many more anomalies on an options surface that your risk/reward scenarios can be insane given the right position. NatGas options are naturally skewed to the upside so calls are expensive...which makes call spreads really cheap. On the other hand, when you see EU - NG rally hard and you know the extend of the move, you could buy 10x the amount of calls and finance them with 5 short calls with a lower strike for even more leverage. I would not take a cookie cutter advice and replace your outrights with a standard spread. Learn options and use them properly
Maybe it isn't the market you are fighting but the fundamental analysis is out of sync with the market. The market can lag fundamentals significantly, i.e. "can remain irrational longer than the trader can remain liquid" or however that old saw goes which in the case of NG it was what weeks? What is attractive to many price action traders is the frequency of occurance of very simple setups and triggers that will point out the tell tale signs of strength which often announce the end of accumulation by big players and the start of markup phase of the market cycle with the attendant likelyhood of timely continuation of price in the indicated direction, frequently without undue exposure to unnecessary risk and premium burn. The alternative is to shun the simple buy calls on a trigger and instead gain education to expertise in the options discipline. Put your thinking cap on.
What would be informative, educational even would be a thought experiment whereby an expert with the where-with-all, the knowledge and the tools to demonstrate an optimal options trade to make money on that NG-202205-Nymex contract move between March 24 entry and an April 21 exit. A case study if you will that an unwashed nube such as myself can get a view into the process and tools that an options operator uses to make a buck on the underlying. What would be a couple of good ways to profit from that example using options?