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re: BOIL has become predictable
Posted on 2/13/14 at 10:47 am to TheBigHurt
Posted on 2/13/14 at 10:47 am to TheBigHurt
quote:
Heaters run off of natural gas. Due to colder than expected Winter, the U.S. has dipped hard into our storage causing nat gas prices to rise. A/C's run off of electricity. U.S. produces an abundant amount of nat gas. With warmer weather the price will come down. Profit
Simple supply and demand issue. Last April DGAZ hit 22ish.
All of that makes sense to me, but I'm still somewhat skeptical. If it was that simple, wouldn't everybody be doing it? Where does the risk lie?
2
Posted on 2/13/14 at 10:54 am to TigeRoots
I would definitely buy within a qualified account (Roth, Ind. IRA, Etc.) because of the tax consequences associated with this ETF.
Posted on 2/13/14 at 10:58 am to TigeRoots
DGAZ held long term isn't really a good idea most times. It is mostly designed for day trading. It actually has to disclose this. Due to what they own, backwardation and contango apply big time.
These guys, at least as I understand it, are buying actual shares of DGAZ, and waiting for natty gas prices to fall, consequently meaning an increase in DGAZ share price.
This doesn't always happen due to the above. See UNG and BOIL recently. As it gets closer to expiry and contract dates, the price almost always comes dead even with spot, and the contract driven ETF's, who own outward contracts, don't always follow.
DGAZ will eat upon itself also. I believe it is an ETN, not an ETF. It is similar to VXX in this regard.
You'd be better off in my estimation buying puts.
These guys, at least as I understand it, are buying actual shares of DGAZ, and waiting for natty gas prices to fall, consequently meaning an increase in DGAZ share price.
This doesn't always happen due to the above. See UNG and BOIL recently. As it gets closer to expiry and contract dates, the price almost always comes dead even with spot, and the contract driven ETF's, who own outward contracts, don't always follow.
DGAZ will eat upon itself also. I believe it is an ETN, not an ETF. It is similar to VXX in this regard.
You'd be better off in my estimation buying puts.
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