NG November and December contract

Discussion in 'Commodity Futures' started by noblehawk, Oct 23, 2016.

  1. why NG November Contract down 5% last Friday, but December contract down only 2.5%? I know it is maybe because November Contract is going to expire in 3 days. But is there any trading pattern or trading knowledge to trade the expiring contract?
  2. Maverick74


    Of course there is, but you have to find it. Build a model.
  3. the NG November Contract is 2.97 now, but the spot price is about 3.35, does it mean the NG November Contract will arise to 3.35 within the next 2 days(expiration day)?
  4. Maverick74


    No, they are two completely separate markets.
  5. But i heard the future contract price will approach to the same price of the spot price when expire
  6. Maverick74


    You need to be more specific. There are over 50 nat gas delivery hubs across the country where there is a spot price. The spot price for "Henry Hub" is determined by daily settlement prices at the Hub not the futures contract.
  7. Sir

    I still donot understand very well why NG December Contract down 2.5%, but the NG November Contract has to go down 5%, almost double, but when NG December Contract recover 1%, the November Contract just recover the same 1%. Why this happens and how this happens?

    2. Regarding expiring future contract price getting close to spot price, but you mention this spot price is not that spot price but the local hub spot price depending on the location? as I see the spot price for NG is 3.34 now

    Thank you very much
  8. trader99


    Yeah, I got fcked in the Nov 2016 contract. Doh!
  9. the NG November Contract will expire tomorrow,and the price is 2.75 now, but the spot price which is also close to December Contract price is 3.15 now, almost 0.4 US$ difference or 13% difference! how can this happen? Does it mean the NG future market is rigged or broken?
  10. Maverick74


    The difference is the cost of storage. In other words, you could buy the Nov gas now at 2.75 and sell forward at 3.15 and lock in a .40 profit on the futures but then you have to secure storage and the implied market rate for storage is that .40 difference. If you can buy storage for less then .40 then you have a profitable trade.
    #10     Oct 26, 2016