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UNG short straddle 2015 Dec monthly

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I just opened my first ever short straddle position. Until now, I’ve been using short strangles. The straddle is similar, except that it uses the same ATM strike prices on both put-call legs.

The details of this trade are as follows:

Date Inst. Mark. # L/S Strike C/P Price Δ Days Max profit Comm. Close P/L
1 11/09/2015 UNG
(dec)		 9.66 1 short 10 P 0.83 0.54 39 $134 $1.50 – –
1 short 10 C 0.52 0.46 $1.50

Trade reasoning

After thinking a lot about my huge loss in NGZ5, I decided to alter my trading strategy a bit. In short, I will open more positions, which will be much smaller than the previous ones. I’ll write a separate post about this later.

Anyhow, UNG is an ETF which follows natural gas prices. Since gas is at a price extreme, as well as at high volatility, it makes since to open a straddle position.

Tasty trade has lots of research on short straddles and flying V’s, and they recommend profit taking at 25%. That is my goal with this trade.
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/NGU5 short strangle

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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:

Symbol: /NGU5
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.

Trade reasoning

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.

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