agree, whatever happens tomorrow, just don't go home without being long that spread as the biggest moves historically have been over the weekend. .30-.40 was previous target but now I can paint it to blow out further on covering as the march OI has grown over last couple of days on selloffs adding fuel to the fire.
Good to see you back Comanche, was worried you had left... If those numbers you post pan out we will be below the 5 year average in two weeks. Monday afternoon I am not only seeing the orthodontist for some torturing, but I'm getting my wizzies pulled afterwards. They are giving me codeine for the pain (did you know they make tylenol codeine tablets??). Wonder if we'll see pre-weekend short covering tomorrow, like the last three Fridays in light of people being aware of the gap up potential for the weekend. I was a bit too enthusiastic today with that March/April spread at $0.000 and to top it off my broker uses a black box proprietary margin calculation system for spreads and liquidated all my spreads (beyond what was needed for maintenance margin). Annoying because it did it after hours when the spread was large and now I have to pay commission again to re-enter plus a loss of 1 cent bid/ask difference on 10 spreads plus I can only re-enter at most 6 spreads because of the large difference between maintenance and initial margin. Weak. Oh well, life isn't fair! So think there'll be short covering tomorrow afternoon for NG in light of the gap up potential?
Take a gander at the market depth. Look at the 56 contract size BID at 6.903 on NGG7 Is that the fellow you were talking about Comanche? Why the hell would someone use such a strange number of contracts? Why would someone want people to know what he's doing? Isn't the whole idea to keep information from other players as to your positioning so they can't grab you by the balls?
When trading OTC (ice), everything is traded in quantities per day, so the feb contrcat if you were trading 20,000 per day would= 2 NYMEX*28 days (for feb)=560,000 MMBtu or 56 contracts on nymex. All I can say is I have never been so bullish in my life as I am now. I will try to post a temperature map later to show you what we're in for.
i'm in feb outright averaged to the lower 6.90's. Hmm tomorrow is expiry for the minys and monday for the full sized, gotta roll over to march, wonder what effect expiration will have? Nearest month outrights should move up the most %-wise since the weather changes are most pertinent to the nearest month? The weekly temperature maps I saw look cold through Feb 10 but the Feb 10-17 map is average to slightly above average. Then again that map is furthest out and El Nino is weakening. Plus I'm just a poor college kid so my maps are just government derived outputs. I would like to see your maps!
How do put/call options create resistance/support? I read that call options create resistance and puts create support but I don't see how they do that. If most of the call options are covered, I could see the rightholders exercising the option and selling the delivered shares or contracts on the market, creating resistance near the strike price. But how do put options create support near the strike price? If the puts are covered with an outright short, and the rightholder exercises the option once its in the money, the writer's position is neutralized, I don't see how that creates support. If the puts are naked, then the writer now has shares which he would either hold or dump, which again does not create support. Can someone explain?
the sellers of the options want to pin them so they expire worthless. its often worth the cost of losing $$$ on the futures to get the price pinned at expiration, especially since volatility is so high on ng options. doing it especially in lower liquidity times (ie after floor hours and over night) achieves this at a cheaper cost. i bet that explains that late selling rush yesterday. pinning in ng market is probably what contributed to this selloff. Here's open interests. 6.50 calls have 4800 outstanding, 7.00 have 2800. similar #s on the puts... looks like 7.00 was maximum return for straddle sellers.
Thank you. There was a study I ran across in the NY Times which concluded that pinning was occurring with equity options. Look at all the covering the last two minutes of floor trading, from 100 contracts a minute to 1,500 contracts!!!, those punks waited until the last two minutes of floor trading before covering. Was that somehow related to the expiration of the MINY's at 2:30 PM? Anyone?