re: If the Banks Kill the Option Premium now into Op Ex Next Fri. The Rally Could be HUGE!!!

UNG puts. Not levered. The contract rolls are naturally a deteriorating factor. Some other reasons. I did some other things in addition to UNG long puts, but my post was about a conservative trade, so for purposes of this thread, long UNG puts.

It looks like there is still some decent pricing, but not as good as I locked for. Look at open interest in 2024, almost all of that is me. Maybe all of it.

I’m just going to leave it at long puts for a maximum loss certain for purposes of this thread and board.

I do have other trades that short natural gas, not specifically a diagonal spread, but more complex than just long puts.

You’re right though, it’s interesting, and there are several interesting trades involving shorting an overheated commodity without a lot of carrying costs. For equity puts I picked UNG for a lot of reasons, and timed it right around 25% below 5 year averages for gas in storage. That’s (gas in storage) improved significantly, but natural gas prices are still, unrealistically in my view, very high. With really no significant fundamental reasons.

What I’d like to do is a CFD, but can’t really legally do that on the US. I’ve sold some futures contracts outright with no margin, and I’ve hedged around that.

I’m in the money on almost all of this already, and have closed some of the larger trades, but I still buy UNG puts if I can get the price I want.

It’s an ongoing thing, and I’ve spent some time on it as there is a lot of money involved. Most of it is outside the scope of this thread. Or maybe not outside the scope of this thread, but would involve more typing than I’m willing to do, to be blunt.

I’ve been called a contrarian on here before. I’m actually pretty conservative given that I use derivatives rather than something risky like buy and hold. And I was 15% cash long before the speculation I’m reading on here.

Do I time the market? Yes and no. I don’t, but I do let my VIX portfolio insurance calls do that for me, which also mean I don’t need to have much more than 15% cash on hand as I collect insurance claim money, so to speak, in downward markets.

Essentially what others think is conservative I view as somewhat risky, and what I do, where others might view it as risky, I view entirely differently. You don’t have to like the “banker” but you do need to think like the “banker.”

To this end, take a quick look at CFTC commitment of traders, back out hedgers, and look what the institutions are doing in natural gas. They’re cock suckers, but I do use their strategy on a smaller scale.