How to play Nat Gas?
- Thread starter drukes1234
- Start date
I'm just saying, what's the point of us guessing where Natty is going long term if we don't first know how to play it?
I showed the curve just for you to choose which expiry may be the best to trade, but you can trade any of these futures to have a long exposure.
If you want to be simple, you can buy March or April 2012. If you have some knowledge of which expiry will gain more than others, you can buy it and then roll to another...As you can see, 95 %of your P§L will be simply be decided by the outright movement of the whole curve:
IMO, if you just want an exposure to natty prices, choose an expiry around when you think you will get out, so that you won't have to roll and manage expiry dates.
Quote from TraDaToR:
I showed the curve just for you to choose which expiry may be the best to trade, but you can trade any of these futures to have a long exposure.
If you want to be simple, you can buy March or April 2012. If you have some knowledge of which expiry will gain more than others, you can buy it and then roll to another...As you can see, 95 %of your P§L will be simply be decided by the outright movement of the whole curve:
IMO, if you just want an exposure to natty prices, choose an expiry around when you think you will get out, so that you won't have to roll and manage expiry dates.
Tradator, thanks, that's something I was thinking about but your chart helps for sure. April 2012 looks interesting to me.
Rew, could you mention some beaten down nat gas drillers you like here?
For an ETF option, you can look at FCG....... much better than UNG. This fund looks to have bottomed last summer and has had quite a run.
Here is the description of FCG:
Fund Summary
The investment seeks to replicate, net of expenses, the ISE-REVERE Natural Gas index. The fund invests at least 90% of assets in common stocks that comprise the index. The index is an equal-weighted index that consists of exchange-listed companies that derive a substantial portion of their revenue from the exploration and production of natural gas. The fund is non-diversified.
Here is the description of FCG:
Fund Summary
The investment seeks to replicate, net of expenses, the ISE-REVERE Natural Gas index. The fund invests at least 90% of assets in common stocks that comprise the index. The index is an equal-weighted index that consists of exchange-listed companies that derive a substantial portion of their revenue from the exploration and production of natural gas. The fund is non-diversified.
UNG and GAZ , what a debacle
For what it's worth, I've chosen to allocate a portion of my portfolio to the theory that natural gas will increase in price over the next 2-3 years. I personally chose to gain exposure via investments in natural gas companies (equities), rather than playing the commodity directly (or indirectly via the various ETFs).
My idea was to get paid a decent yield while waiting on the potential increase, vs. getting killed by contango.
My idea was to get paid a decent yield while waiting on the potential increase, vs. getting killed by contango.