How to play Nat Gas?

drukes1234 · Mar 3, 2011

Let's say one were bullish Natural gas for 2011 and would like to be long for a full year. How would one play this? CHK or other stocks aren't interesting to me as they have all spiked already and may not track Natty all that well. I want a pure play but the UNG is obviously quite a joke. Would buying 2012 futures make sense? Or LEAPS in nat gas? Any ideas?

Thanks

TraDaToR · Mar 3, 2011

Here is the futures curve if you want to compare expiries :

TraDaToR · Mar 3, 2011

You may want to ask Papa Roach or the other seasoned nat gas traders about the best long exposure.

FrankSlaughtery · Mar 3, 2011

They don't call NG the widowmaker for nothing - trust me.

There will have to be a substantial move in NG to overcome the steep contango shown in the chart. If you think this will happen either buy longer dated futures or options on futures (not on UNG!). Or you could just short the rallies since NG is in a persistent downtrend due to huge oversupply. If you really want excitement take a directional position at 10:29 every thursday

TraDaToR · Mar 3, 2011

I thought the "widowmaker" was Mar/april NG spread, not NG as a whole.

spread_trader11 · Mar 3, 2011

Quote from FrankSlaughtery:

They don't call NG the widowmaker for nothing - trust me.

There will have to be a substantial move in NG to overcome the steep contango shown in the chart. If you think this will happen either buy longer dated futures or options on futures (not on UNG!). Or you could just short the rallies since NG is in a persistent downtrend due to huge oversupply. If you really want excitement take a directional position at 10:29 every thursday

NG isnt the window maker itself.

H/J spread is known for this name....

drukes1234 · Mar 3, 2011

So there really is no logical way to play Nat Gas over a year long period

spread_trader11 · Mar 3, 2011

Quote from drukes1234:

So there really is no logical way to play Nat Gas over a year long period

Sure, just dont use lot of leverage, maybe look at shape of curve out back...

Although it is tough

adadadog · Mar 3, 2011

NG seems to be a good alternative to OIL and gaining momentum, publicity. But timing is the key. A lot of traders will lose a lot of money for going long on NG.

drukes1234 · Mar 3, 2011

Quote from adadadog:

NG seems to be a good alternative to OIL and gaining momentum, publicity. But timing is the key. A lot of traders will lose a lot of money for going long on NG.

The point of this thread isn't to discuss Nat Gas direction, it's to discuss HOW TO PLAY IT, then your guess on the direction can actually be profited on.