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United States Natural Gas ETF Message Board

  • juzzam666 juzzam666 Aug 27, 2009 12:31 PM Flag

    UNG 19% PREMIUM and still headed to $6 within weeks

    Nothing has changed. Get educated about this "investment."
    You own the October NG contract at $3.13 and based on that the UNG NAV is $9.67.

    Within weeks you will be rolling into the November contract for $1 higher. Assuming flat prices, you will own November at $4.13 but UNG NAV will still be $9.67.

    Management has indicated they will issue shares as soon as possible, which will enable the UNG to fall to NAV ($9.67) immediately.

    Anyone buying the UNG at $11.40 has a breakeven November NG price around $4.90. Yes, NG in November can be $4.90 and you will be just breaking even.

    Of course, we know things are much worse than flat price and flat spreads. If September at $2.70's is any indication, October will be dropping like a rock and Oct/Nov spreads will widen further in my opinion to $1.50.

    The UNG will be $6 within WEEKS and will NEVER RECOVER TO THESE LEVELS. BEWARE OF THIS DEATH TRAP OF A FUND. You have been warned over and over again.

    Good luck

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    • Excellent analysis, and the only one that makes sense from here for a commodity that is in excess production supply with no storage capacity left, and no end in sight to same.

    • Nothing ever is guaranteed but I think good conservative play.

    • While I wouldn't long UNG because I don't see it capturing the full upside, I certainly wouldn't short it. You have to realize that this thing has absorb a LARGE amount of shorts already and yet kept it's massive premium. There is not a lot shorts can do to UNG other than short NG futures.

      Today was rather interesting. It's the first time the big boy who short EIA report has been forced to cover. He nailed NG futures but then found almost no sellers and had to cover in the afternoon.

      While this doesn't guarantee that NG will go up, it does mean that it is fairly safe to buy on dips.

      Disclosure: Long hnu.to --bought Monday morning and this morning.

      • 2 Replies to henli1000
      • Yep. hnu (hzbbf) is a good one.

      • see, I don't care whether UNG goes up or down. actually I'd rather it be really volatile and go up. For some weird reason the investors attracted to this seem to like it more as it goes down in price. I just don't think it's feasible that this kind of premium can stay in for long. I could be wrong and underestimating the intelligence of my fellow man but one can buy HNU as you did (I am long HNU by the way with the Canadian currency hedged) with no premium. Beyond that if UNg starts creating shares again premium will drop immediately. All of that aside, to make money with this one would have to be great market timer. To buy and hold against this contango is suicidal.

    • I know this will get lost in the sea of people screaming about "shorts' trying to scare people and inexpereinced people asking naive questions but will comment anyhow. This fund is suicidal. It is amazing to watch so many people who have no idea how the fund works throw their hard earned money away. this poster is correct, investors in UNG do not own natural gas. They own a fund that is executing a simple strategy......rolling futures contracts into the next month. each month with the contango the contract price is higher and so less contracts are bought. NAV is almost certain to go down every month even if gas were to rise. With the premium at 17% or so it is absolutely absurd. especially when one can either buy futures on your own and roll them or purchase HNU out of Canada without paying the premium. Even in that case the strategy itself is flawed for a buy/hold investment. Myself.......I am long Oct gas and short UNG patiently waiting for the premium to collapse. I wouldn't play this straight up long for all the tea in China as they say.

    • this is burning people left and right. just my sense tells me something is wrong and i know there is a reason. nothing goes down like this everyday without a reason. and plus CNBC, thestreet.com, investopedia.com are all saying the same thing

    • You are assuming that price will stay here, it is like when oil was at $35 everyone said will go to $20 and when it was $150 everyone said it will go to $300 some even said $600.

      • 1 Reply to snlpatel
      • No, I am not assuming the price stays here. I am assuming NG in winter is above $5 or $6. Of course there will be pain before then. I expect the OCT contract to take a beating. Unfortunately, the UNG will not get to participate in the natural gas rebound into winter because it will be CRIPPLED in the Oct/Nov roll. It is $1 spread right now, but I am assuming $1.50, which could mean the UNG next month ends up holding 40% less contracts than it currently holds. Talk about a monster negative contango yield. It will be painful.
        And let's not even talk about the Nov/Dec roll. I think it will be much less than the Oct/Nov, but the market is currently pricing it at $0.86. The UNG is dead meat.

    • josephgiuffre@att.net josephgiuffre Aug 27, 2009 1:03 PM Flag

      Well said. If you want to play n.g. try FCG it's trading at a discount to it's NAV.

    • Are you shorts in a hurt mode already? MEP

 
UNG
15.48-0.13(-0.83%)Dec 26 4:00 PMEST

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