Posted on December 15, 2022
Natural Gas, as represented by the U.S. Natural Gas ETF (NYSE:UNG) is among the most volatile items trading in today’s market. Posting five percent moves (or more) almost daily for a month now, UNG is a day trader’s dream.
Everyone’s expecting colder weather in the next few weeks, and daily forecasts are jettisoning NYMEX NatGas contracts all over the map.
Whether the cold snap actually materializes is a separate question, and as the storm draws closer, we’ll obviously see the market’s reaction.
But that’s all short-term thinking—and trading.
We’re looking to set a trade today with the potential to deliver 1076% over a slightly longer time frame, one that involves a more subtle reading of price trends and takes advantage of some wonderful options prices that extend beyond the New Year.
Yes, intense cold will generate heating demand, and yes, we’re entering peak demand season, but looking beyond that coming storm forecast offers us a superior risk-defined trade, and it’s with that in mind that we’ve crafted today’s bet.
Many happy returns!