My newest trade involves trading options on natural gas, symbol /NG. I’ve been studying how the natural gas market works, gathered my findings in my NG trading guide, so I’m semi-confident in my knowledge of this market.
The details of this trade are as follows:
Status: opening trade
Strategy: short strangle, SEP 15 2.5 P /-\ SEP 15 3.3 C (market at $2.895)
Contract size: 2
Days to expiry: 36
Max profit: $820
I sold 2 contracts each, as selling in multiples of 2 allows for more room to adjust if needed.
The fundamentals are mixed. Hot weather is coming in the US, which raises demand, but supply is also exceptionally high, as seen here. Last Thursday, the EIA reported a net increase of 99 Bcf from the previous week, with stocks 653 Bcf higher than last year at this time, 73 Bcf above the 5-year average of 2,694 Bcf.