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Discussion in 'Commodity Futures' started by runningman, Jul 1, 2007.

1. ### runningman

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.

2. ### Comanche

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.

3. ### runningman

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?

4. ### HLB

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) ?

5. ### runningman

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. ### HLB

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

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