Nat Spreads

Quote from PAPA ROACH:

I trade more by "feel" than anything ...
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I know this can only be learned by actually doing it, but is there any literature or video's or anything that might serve as a good primer on why futs behave the way they do (price wise)? I'm not really talking about fundamentals as much as just watching the trading in the market and understanding what's going on.

Thanks.
 
Quote from texrex2002:

I know this can only be learned by actually doing it, but is there any literature or video's or anything that might serve as a good primer on why futs behave the way they do (price wise)? I'm not really talking about fundamentals as much as just watching the trading in the market and understanding what's going on.

Thanks.
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Not that I am aware of, just alot of sweat equity and time. You'll never stop learning about natural gas, no matter how long you trade it.
 
Quote from texrex2002:

I know this can only be learned by actually doing it, but is there any literature or video's or anything that might serve as a good primer on why futs behave the way they do (price wise)? I'm not really talking about fundamentals as much as just watching the trading in the market and understanding what's going on.

Thanks.
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I would imagine it's pretty tough if you're not in a shop or talk to people who are trading every day. You have the seasonal spreads that interact w/ each other, locals and market makers trying to trade their books and/or hedge their positions, paper buying and selling options for size on the floor, and the OTC market which is all shadows.
 
PAPA if I can ask, do you think front-running UNG will become an overcrowded trade? Or is UNG just too massive?

Could you have to get in sooner and sooner as the trade becomes more popular, to front-run the front-runners so to speak?

And from what you can see are UNG's rolls timed according to its roll schedules, and does this become harder to assess again as more people join the front-runners?

Thanks very much and thanks esp for your posts.
 
Quote from day4night:

PAPA if I can ask, do you think front-running UNG will become an overcrowded trade? Or is UNG just too massive?

Could you have to get in sooner and sooner as the trade becomes more popular, to front-run the front-runners so to speak?

And from what you can see are UNG's rolls timed according to its roll schedules, and does this become harder to assess again as more people join the front-runners?

Thanks very much and thanks esp for your posts.
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I really cannot give a definative answer here, I don't really believe anything in the trading world ever stays static, including strategies. The size that UNG has acheived to date is still a new dynamic. As of Thursdays close, UNG held just over 101,000 NYMEX/equivalent longs, all in the August contract. That is quite large for front month only concentration.

I have jumped in at levels I believe are a good value IF I WERE TO TAKE IT INTO THE CASH MARKET, ignoring the UNG roll dynamic. Now adding the UNG dynamic only further strengthens what I feel as a very good risk/reward set-up in the spread. I would very much prefer to take profit on the spreads without having to go into the cash market, much cleaner and a quicker gratification!

It will be hard to really identify whether the front-run is an over-crowded play, unless the price levels are just too wide from the get go, that would likely be a tell tale sign, but at this level (-.13) this is a good value in the cash market given the reigning fundamentals.
 
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