are any of you guys trading any options on the NG or just leveraged futures trading??? i've been following the natural gas story for a bit.. my uncle was big time in the pump business. so it intriques me .. i'd like to figure out a good strategy to get exposure.. and i really don't yet have an opinion about direction.. i do believe in the fact that EVERYTHING can always keep going lower no matter how freaking cheap it gets..
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Natural Gas
- Thread starter gdtrader
- Start date
Quote from optionbull:
yes.
whats up ?
well i've never traded options on futures..... and i was looking to .. i have traded options on equites for coming up on two years now.. everything from condors,debit, credit spreads.. butterflys.. ratio backspreads.. etc. etc.. i would like to start in NG because i have followed the story for a while..... i like volatility trading and i know the volatility in commodities can really be good.. I don't even know how to pull up the options chains in my interactive brokers account.. much less what the values are related to trading the future and how that translates into options...
this is what i've read
http://www.theoptionsguide.com/natural-gas-futures.aspx
i just get the feeling that its going to be hard to get exposure and keep my position size as low as i need it for my small account size 20k
Quote from cdcaveman:
well i've never traded options on futures..... and i was looking to .. i have traded options on equites for coming up on two years now.. everything from condors,debit, credit spreads.. butterflys.. ratio backspreads.. etc. etc.. i would like to start in NG because i have followed the story for a while..... i like volatility trading and i know the volatility in commodities can really be good.. I don't even know how to pull up the options chains in my interactive brokers account.. much less what the values are related to trading the future and how that translates into options...
this is what i've read
http://www.theoptionsguide.com/natural-gas-futures.aspx
i just get the feeling that its going to be hard to get exposure and keep my position size as low as i need it for my small account size 20k
Most recent ( last couple months) has become one of the volatile contracts in commodities.... not sure what your view is on trading the commodity ....
.01 cent move x 10,000 mmbtu = 100.00 per contract same for option ... there is a mini contract for 25 bucks per penny.
Lot of the "traders" in the industry trade the "spread" or strips that are seasonal in nature.... thats why I asked what your looking to do.... do you look at "skew" or just directional volatility ?
I personally think that the large players ramped up production to attract a higher usage of the gas... They are playing the cards such that the smaller players eventually get wipped out because they can't afford to keep producing the commidity at such cheap prices.. My uncle sold nature gas pumps that ran on natural gas.. Dressor industries... I've talked extenisvely about the deal... I haven't followed it probably as you guys.. But i've wanted to trade nature gas for a while and i'm an options trader at heart... I usually trade butterflys and wrangles.. Short vol on the small moves and long vol and the tails. .. I don't short alot of premium... I'm more of a vol trader... And i'm happier every day of the week buying way otm options then selling them.. Timing on the natural gas turn around to me is a tough one. . I wanna be slowly expose myself long to it.. But i near term would like to exploit the volatility.. Now this is me just talking outloud.. I might have to trade in the mini. ... I can't buy butterflys for 5 grand.. Thats way to much concentration for my account size..
Quote from cdcaveman:
I personally think that the large players ramped up production to attract a higher usage of the gas... They are playing the cards such that the smaller players eventually get wipped out because they can't afford to keep producing the commidity at such cheap prices.. My uncle sold nature gas pumps that ran on natural gas.. Dressor industries... I've talked extenisvely about the deal... I haven't followed it probably as you guys.. But i've wanted to trade nature gas for a while and i'm an options trader at heart... I usually trade butterflys and wrangles.. Short vol on the small moves and long vol and the tails. .. I don't short alot of premium... I'm more of a vol trader... And i'm happier every day of the week buying way otm options then selling them.. Timing on the natural gas turn around to me is a tough one. . I wanna be slowly expose myself long to it.. But i near term would like to exploit the volatility.. Now this is me just talking outloud.. I might have to trade in the mini. ... I can't buy butterflys for 5 grand.. Thats way to much concentration for my account size..
Sounds interesting....
well, I agree on the tails part..... seems to always happen in the Nat Gas market!
Quote from cdcaveman:
Pricing in the way otm options are fuzzy as hell.... never be heavy short these its suicide
yep.
Happens in the power markets too. Barclays recently sold vol in some capacity..... lost big in the heat wave last month,,,,,, they got paid doing it for a long while tho! until... boom
Heavy short premium strategy's are the worst ..until you have everyone thinking its the end of the world.. then sell all the premium you can afford..thats when you can bet against Armageddon because the end of the world only happens once and your brokerage money won't help you then anyway haha