the reason I ask, is because I was looking for a way to stay long crude longterm, and never could find a decent way to do it. Same with NG. All kinds of short term opportunities but almost no way I can see to hold longterm without extremely deep pockets. I finally gave up and just bought some energy stocks. thanks for the reply
the "real money" in Nat gas is in the spreads....... spreads between the front and mid to back term. yeah very volitile to keep on just futures, can be right and wrong in matter of minutes..
do you also use long options for the calendar spreads? Or in that case do you use futures? Or do you just put on a typical calendar, long the front month option, short the back month option? I know it's not that simple, but just generally
i do not play options based on spreads that far out no. I stay within a couple months based on directional play of unerlying for now. Although the real big dollars are playing the strips like April- Oct, Jan Jan etc. Also the Cal spreads as you mention...
"term structure" I refer to that as an option itself.... said: I want to put on a January "structure" maybe a bull call spread etc. I have no term on other than Novy right now
I havent done that recently although Winter months , maybe January pulllbacks worth a shot on the long side call spread...
Been a long time since I've posted anything natty here, been no reason to post much really. A market full of shitty fundamentals for too long..... Finally getting mega-bullish for me, not so much up front as in the deferred months on the curve. Have been loading up a portfolio of 2014 and 2015 outright calls and fences, sprinkled with some smaller 2013 bullish exposures. The three primary drivers for me: -Large scale demand project buildouts; power generation to replace hefty coal retirements, industrial projects capitalizing on the low price in the US compared to the world LNG price to name a few. -Declining gas directed rig count; HBP operations have matured in highly prolific dry gas plays and rigs have migrated to the oily/wet plays. It will take a large price swing in the WTI/NG spread to swing rigs out of oil and back to dry gas as the profit per widget drilling oil is immensely more profitable, even if gas were to rise to $6-$8 vs. WTI at $85/$95. Remember, it is not about the total rig count as much as where those rigs are drilling. Haynesville is down to 20 rigs now from a peak of roughly 185 two-years ago. The same trend exists in Fayetteville, Barnett, etc etc... -Price. This market has no choice this year but to price out supply in one way or another (price affected rig counts in this instance), and price in as much demand as possible to address the serious storage surplus overhang we came out of winter with. It looked almost mathematically impossible but has happened, via price. Now at the end of refill, we will not have storage congestion and thus remove a very stout resistance fundamental that existed all year. I believe the price in late 2013-2016 is extremely undervalued and does not price in the increasing base demand coming online as well as further coal retirements, as well as the effects of a 13-year low gas directed rig count. I find it extremely unlikely we will experience another blowtorch hot winter like last year, thus sending us into an ever-increasing year-over-year storage deficit throughout the winter period. It will be important to think about what price would you move an oil rig back to natural gas....