Anyone know of any charts of the Natural Gas/Oil BTU Spread? Its getting very large now, I'm just wondering how that compares to its historical norms.
Old Ratio is 6:1 Natty price*6 or crude price/6 that ratio has been de-coupled for awhile now. I have seen many a trader get hammered trying to play that over the last year-and-a-half.
I think technically its 5.8 times NG, but 6 is close enough. Have you seen a chart or historical highs/lows on the ratio?
say, one want to play this with QM and QG How many QG contracts he should go long and how many QM short? QG's multiplier 2500 QM's multiplier 500 2500*QGprice*numQG = 500*QMprice*numQM QMprice = 6*QGprice ? QM price AUG = 71.800 QG price AUG = 6.615 2500*6.615*numQG = 500*71.800*numQM numQM / numQG = (2500*6.615) / (500*71.800) = 0.46 numQM = 0.46*numQG So, sell 1 QM and go long 2 QGs (or 1 NG) ?
Here's how I read it: 1 CL = 6 NG 1CL = 2 QM 1NG = 4 QG so 2QM = 24QG 1 QM= 12 QG So you would buy 12 QG and sell 1QM someone check my math. ps anyone in this trade right now is getting steamrolled.
6:1 isn't ratio between number of contracts, but between price of n. gas to price of crude oil. So it, sell 1 QM long 2 QG or sell 1 CL long 1 NG