This is one area I am lazy in, I get my info from a couple of analyst at large energy companies that keep up with this. I can't tell you where to go to find it yourself, I don't know.
Very nice. What made you exit a penny early? Seems like things were going your way. again, what a super trade!!! I'm goign to have to look at some of your other trades and take notes... Thanks again for sharing.
I trade more by "feel" than anything, it was a penny from target and the momentum had died. STill hasn't hit the .735 i was working. I have put on two of my three layers in the +N/-Q, was going to get the l;ast on at .185, but the market has moved out so fast that now I am holding for .225-.215 area, (that feel thing), as we are facing the UNG roll starting friday, this has mostly been front running of the goldman roll and UNG roll as UNG holdings are now over 70K contracts!!!
A couple guys in the office here just legged into the V9 / F11 around -3.15, based on looking at the forward curve and the assumption that the lows are in in the front month. A little risky, but looking for a -2.75 exit. Wanted to see how this trade coincided with those that work in the cash market and have a better feel for the fundamentals. Let me know what you guys think...
Roach, Looks like you could have gotten these done today around .21-.22, did you end up getting any more on?
I have held back that last tranche, the spread has blown out so fast that I am waiting a bit on the last piece. It traded between .207 to .191 today. I think its blowing out so fast on the excessively large UNG position that has built up and will commence rolling on Friday, front running if you will. The one thing you guys should take note of is that I trade physical as well, and I have the ability and sometimes do take these spreads into the cash market if I havn't hit my targets and I still like the trade. Over the long run, this affords me more ability to make money on these spreads than if I was just trading the futures portion only. I usually would rather exit the trade financially, physical can be a pain in the ass sometimes.
In the PJM RTO, coal as of the beginning of this year made up 66,583 MW of generation. Load today (6/9) peaked at 98kish . Nukes make up 31,000 MW of generation. If you assume that there are no plant outages (which is never going to happen), and you add nukes & coal, you get to 96k of generation. Both nukes and coal are stupid cheap to run.... Add the fact that gas sucks now, and you've got cheap prices all the way around.
Regarding the N/Q, the bottom fell out before the UNG roll even started correct? Why wouldn't this spread just keep going come friday and next week?
I think the ship may have sailed on this one. The UNG front-runners will take their profits by unwinding into the UNG roll. Depending on the volume in this trade compared to the volume of the roll, the spread may not move much more. I think it has run up from .1 to the .2 range in the last several days. I think its telling that the smart money (Papa) has moved on to the next hunt. The bigger question will be the UNG (& BetaPro) position going forward. Investors face a steep contango in the coming months. That $6 range looks pretty rich to me. EIA is forecasting only a slight drop in production in '09 and '10 compared to the 7.5% increase in the US in '08. That might not be enough to catch up (down) with demand.