re: BOIL has become predictable

??? What ya asking Use The Force Be With You?

I think most brokers offer it as an additional service. Schwab's is through optionsxpress for example.

Commodities futures and futures options require a commodity account. Don't mess around with futures contracts if this is your first time. It's highly leveraged. One natural gas contract controls 10,000 million British thermal units for delivery. They really don't deliver, or force delivery, but they will force upon you a warehouse receipt, or make you produce one, and either buy or produce the full payment for 10,000 million btu's upon expiration. It only requires $3,080 in initial margin to buy or sell a contract, and $2,800 to carry it overnight. But if the price declines .01, you need to come up with additional funds, aka a margin call.

Purchasing (options) calls, or call spreads on future's contracts is different. You've established a maximum possible loss, which is the cost of the option on the future's contract. You've purchased the right, but NOT the obligation to buy one future's contract at a specified price.

If you're talking about calls on UNG, BOIL etc, you can do this with your online securities broker. You need to fill out an application to be eligible to trade options.

Again in either (options) case above, buying a call, a call spread, a covered call, a put or a put spread has a maximum loss, which is the cost to enter the trade. If you're talking about selling the above uncovered, you really need to stay away from this until you know what you're doing.

I suspect you're talking about buying calls on Dec/Jan natty gas contracts at $4-$4.0. In that case, open a commodities account and buy the calls. Your maximum loss is limited to your cost. This is what I generally do the most frequently.

A spread is for example buying a Dec $4.00 call, and selling a Dec $4.50 call. Your loss is still limited, but so is your gain. If natty gas goes to $5, you need to produce a Dec futures contract at $4.50, but you have the right to buy one at $4.

Well given the fact that we are getting actual cold fronts early this has an opportunity to do two things; it could extend injection season and drop price further by getting storage to roughly 3600 almost to 5 year low avg benchmark..

I think what happens here is by October warming season will begin earlier...... This will cause ng traders to look at the bigger picture.....


Bigger picture is that another rough winter and we could potentially exhaust all storage..... Which is really want producers want......

I see no way if weather patterns Continue to trend cool how natural gas doesn't hit 5 dollars by Jan 1st and 7 by Feb.

This is really the first week I have no idea how things will go on Thursday. Projections are below:

LINK

We are getting close. Cash dropped like a rock yesterday and futures are following this morning and all last night.

I'm undecided whether to go long today, or wait until after the report tomorrow morning, but I'll be going long soon.

Force, do you still have a $57 price point for KOLD? It's awfully close.

How do you think it'll react to the injection report tomorrow?

Yeah...........I think tomorrow if we beat projections we could see 57.50.

I thinks 97 would make a big splash.

User - Please see below as further explanation regarding maximum loss and maximum profit potential on the calls spreads I was talking about.

Jan. 27 Expirations
.178 4.50 Call Buy
.092 5.00 Call Sell
.086 Cost ($860) Max Risk
Maximum Profit: .414 ($4,140)

Dec 26th Expirations
.149 4.50 Call Buy
.069 5.00 Call Sell
.080 ($800) Max Risk
Maximum Profit: .492 ($4,920)

This was as of this morning. I'm not pulling the trigger yet, but will be by no later than Mid-August.

The long call spread on Dec and Jan contracts seems to set up nicely, and I think a $4.50 strike price is decent. What I anticipate will happen is that whatever I sell the $5 calls for will deteriorate in value after I sell them, and I will buy back at a lower premium and keep the $4.50 long calls to maximize gain per trade.

If the trade goes all to heck, what I've done by selling the $5's is lower my entry cost and maximum loss.

I think I'm also going to sell uncovered puts and collect premium. Margin is full futures contract margin, premium collected and some other percentage. Still if I sold both Dec and Jan $3.50 puts I'd collect $1,800 per trade. It would tie up capital (margin), but when you take it as a percentage return on capital over the short length of trade it seem attractive to me. NG would need to get awfully close to $3 to cost me money, and I can buy these back at a loss at any stop loss I choose.

Less risk equals higher premium. There is much less risk in a $20 call right now. Partially due to time decay and what the current price is.

But a lot of reasons outside this also. Not unimportant is market inefficiencies.

As a general rule options close to strike usually always carry a higher premium.