help - natural gas on i/b

All you do is buy the commodity contract you want and 2 days before the First Notice Day of that contract you sell it. First Notice Day is basically the expiration day for the contract, you don't want to be in a contract after this day. Your broker will send you a message telling you to get out before this day and if you are not they will sell your contract.
You then buy a contract in the next forward month the contract is trading in. And repeat the process. You will pay commission to buy the contract and then commison to sell the contract. When you sell the contract before the first notice day it will usually be trading at a lessor price then the next contract.

For instance, march corn's first notice day is coming up so I sold my contract at 223.25 today. I then bought the next traded contract, may corn at 234.25. So I paid commissions and a small spread the difference between rolling over the contract.
 
thanks johnny walker

i sort of get it.... but how do you control your risk if you don't know how much it will cost you to roll forward? is there somewhere to access the historical premium you would have paid to get into the forward contract?
 
Quote from alanm:

You can't "purchase an index".

If you go to the NYMEX site, you can see what/where/when/which contracts are traded. Like the other NYMEX mini electronic contracts, they only list the first two nearby months, believing that the primary interest is in short-term speculation. The pit-traded contract list 72 months.

Currently, you cannot trade pit-traded contracts at IB, though if you search for it, you'll see that they are coming soon. I only heard credible talk of this starting after the Refco collapse, not "years" ago.

There are plenty of commodity brokers out there who trade the pits. I don't understand the reason for anger/frustration.
More...

CME floor products (pit) are now available through IB. The first offerings are futures as follows:
1. Euro Dollar IB Underlying: GE Trading Class: ED
2. S+P 500 IB Underlying: SPX Trading Class: SP
3. Live Cattle IB Underlying: LE Trading Class: LC
4. Lean Hogs IB Underlying: HE Trading Class: LH
5. Nasdaq IB Underlying: NDX Trading Class: ND
6. Euro FX IB Underlying: EUR Trading Class: EC
7. Canadian Dollr IB Underlying: CAD Trading Class: CD
8. Japanese Yen IB Underlying: JPY Trading Class: JY
9. Aussie Dollar IB Underlying: AUD Trading Class: AD

We will release additional CME products, including options, by the end of next week.

Commission info is posted on our website. For now, there is no minimum order commission, although we may add one to frankly discourage 1 lot trading. The pits are not efficient and the brokers will ignore small orders that are frequently modified or cancelled. Traders used to the unrestricted ability to control their trading in electronic markets will be in for a rude awakening.

There is a risk disclosure when you sign up for the US floor access that is, if anything, an understatement of the issues you may experience. For instance, you can fully expect to only get a fill on a floor contract when the electronic version is already priced to make an easy arbitrage against your order for the local on the floor. Trade reports can easily be 30 seconds and 2 minutes will be not uncommon.

The above is not meant to discourage use of the floor for products whose primary liquidity is on the floor. But we do want traders to recognize the realities of the floor, namely the order is being managed by people who will make errors, be slow, or have a conflict of interest (dual trading, for example). Additionally, there is a significant inherent latency in the execution/reporting process. IB will get your order to the floor in a few seconds. After that, we lose a significant amount of control because the orders will be in a non-digital environment. One of the main reasons IB has avoided pit access is that the trading environment on the floor effectively undoes all the work we have invested in high speed order routing, SMART technology, etc.

But for those who need/want Lean Hogs, etc, they are now available. More CME products next week. CBOT in a few weeks. NYMEX a bit thereafter.

Good luck and good trading.
 
thanks to everyone who posted replies to help me!

i have more questions

i am looking at natural gas futures - the 10,000 mmbtu contracts 5 years out. dec 2011. they are priced at about 8$

#1)i am obviously green and missing somethign - because to me that seems like a good deal. you are paying a $1.50 premium to what nat gas is trading at and that prices in inflation, carrying costs, storage costs, event risk etc...?? Plus, the broker I am hooked up with will finance 75% of the deal for 5 years for no interest charge.

What am I missing?

2) How can I find out what the contract 5 years out was trading at when natural gas was at 15$ 6 months ago? trying to asess the sensitivity of the price that far out

Thx and praise

nne
 
Guys, what's with the QG contract. When I look at the details (on IB) it trades from 15:15 to 23:59

Is there not a nat gas contract which trades normal business hours and is liquid ?

What am I missing ??
 
Quote from niceneasy:

i still cant figure it out....

if i want to participate in the commodity natural gas through i/b - how do i do it?

id like to participate with a very long time horizon. i looked at some of the natural gas equities but they are trading at googlesque type multiples and not nescessarily correlated with
the commodity.

you can't buy qg the index. and the futures only go two months out.

any suggestions?
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what kind of moron are you ? ? ? ?
You want a position long term, you buy the nearest contract and roll over, you pay the cost for rolling over if you are long, you get paid if you are short unless there is backwardation then it's vice versa. At least do some work yourself, this is plain and easy stuff.
 
ramuk,
You have found an error in the contract spec on the Web site. The trading hours are actually 15:15-14:30.
 
It's actually a common problem, which I've reported previously. The table only handles one hour range per day. Look at QM/NYMEX, which says it only trades 1515-2359 during the week. It also trades 0000-1430.
 
cvds

it really detracts from the effectiveness of this site if someone can't ask a question without being ridiculed. am i a moron? absolutely not. i am new to futures and have benefitted greatly from the collective insights of people who have replied to my post in a constructive way.

furthermore, you are wrong. rolling the front month if you want to hold natural gas for a few years, as per the original nature of my inquiry, is not at all feasible economically. you can participate in the big contract several years out if you use a commodity broker other then i/b. thank you for participating though and i hope whatever rash it is you have that causes you to behave so aggressively clears up
 
I think that the Retail Firms forum should be reserved for serious and dignified discussion about Retail Firms, even in cases where one believes another discussant is a "moron", and also including those cases where a discussant who really is a moron erroneously thinks that somebody else is a moron, etc., etc. Nobody should be called a moron, or any other name, in the Retail Firms forum.

Perhaps Baron might be persuaded to open a separate forum for people who like to engage in name-calling and personal humiliation.
 
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