Market Curiosity: Exploring Markets And Systems

January 28, 2011

Sell UNG natural gas puts +17%

Filed under: +06 to +25%, Short Puts — Tags: , , — Jeff Fitzmyers @ 10:20 am

Sold UNG Feb 6 puts for $0.29.

A very simple and safe trade is selling puts on commodities that are near the cost of production — or when everyone says there is a huge supply. Prices can dip lower for a short while, but unless the world blows up they will rise again some day: very limited downside. The only commodity right now that fits that is natural gas. And the commercials are net long.

Brian Hunt via DailyWealth” The secret to earning safe, high rates of commodity income

+ Monthly CCI is trending up from a low.
+ Weekly CCI above monthly CCI.
+ Daily CCI seems to be turing up while price has support on the lower Bollinger Band.
– 170 EMA still heading down, but not too big a deal if price is at commodity production lows.
+/- 34 EMA is flat.
+ Commercials very net long.

References: Buy March natural gas

Feb 3: Covered at 0.24 +17% Half the reason this trade was closed was to show even when selling puts, and price falls near the original selling point, the puts can be covered at a profit. Using time.

The other reasons are listed at the bottom of the natural gas long trade that was closed yesterday. (Price likely to go down for a bit.)

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