Market Curiosity: Exploring Markets And Systems

February 25, 2011

UNG – time to sell some more puts (paper trade) +42%

Filed under: +26 to +50%, Short Puts — Tags: , — Jeff Fitzmyers @ 11:04 am

Sold March 6 puts for 0.70.

+ Hammer at past support.
+ Volume decreasing during decline.
+ Weekly CCI turning up.
+ Daily CCI above weekly CCI, but still low.

References
+ Bought March natural gas due to very long lower candle wick +0%
+ Sell UNG natural gas puts +17%

March 2: Opps, learned something:

WHY WE AVOID THIS POPULAR ETF [UNG] Back in September, we called this fund “The World’s Worst ETF.” The performance chart below shows why. As you can see, natural gas (the blue line) has gained around 40% since striking a bottom in mid-2010. Hamstrung by its futures strategy, UNG (the black line) has lost investors 40% of their money during the same time! Only Wall Street could build a vehicle that generates fees while investors lose money on an asset rising in price.

If you want to “get long gas,” stick with hoarding undeveloped or income-paying gas reserves.

On a month to month basis, it’s not the end of the world, but better to short puts with futures, or ECA.

March 18: Covered, +42%. UNG’s Death Knell Has Been Sounded via the 8K Filing

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