UNG short straddle 2015 Dec monthly

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.

I’ve been simulating the adjustment of straddles in my paper money account, and even if he price moves against you, it can be followed by writing extra short strangles in the given direction. Actually, it can be followed like this for quite a while.

If the price turns again, it will enter the profit zone, and need to be closed at profit.

Here are the details of this trade:

ung-12-2015-risk

ung-12-2015-chart

ung-12-2015-chain

My position size is super small, as this is a new strategy for me. Let’s see how things play out.

 

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