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United States Natural Gas Fund, LP Message Board

  • jewolf2182 jewolf2182 Oct 19, 2009 3:36 PM Flag

    Silly Longs Profits are for Shorts

    I have really really tried to be nice but by far and away I would say most longs have no noooo idea of what pain there could be to come and/or "how little upside" there will be this winter and find most of the posts laughable.

    As of right now, UNG owns natural gas at 5.758 with a share price of 11.76 or a UNG/NG ratio of 2.04 (there is some premium in there as well).

    For those of you saying UNG will be at 14 by the end of the week, I give it a 0.10% probability of happening. It would require December Natural Gas to increase from 5.758 to 6.87 or 20% in a week or 5% up for the remaining four days in a row. Heck UNG cant break above 14 for a month unless the Dec NG contract goes to 6.87 for the entire time they own it (roughly the next month).

    For those of you saying this is way undervalue, your wrong its actually OVERVALUED as the stock price is trading at a premium to the NET ASSET VALUE or NAV.

    If you think I am wrong, post your estimates to where you think December Natural Gas goes. Dont forget you roll out of the contract in Novemember and into the January Natural Gas Contract (which settled today at 6.07).

    So fast forwarding in the future to the January roll, as of right now you could roll into that at a share price of 11.76 and buy 6.07 NG at no increase to the stock price or a ratio of 1.93 UNG/NG.

    This is all the while your getting less and less contracts of natural gas to spread over an increaseing total number of outstanding shares which then lower's a "longs" potential profitability.

    I am net short, fully hedged and am laughing so hard from these posts its better than most comedies.

    Wolf

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    • Never say never. Commodity prices are rising in the face of weak demand. The albatross for natural gas is UNG. If the CFTC decides to be lax (unlikely) and allows retail investors to flood the market, natural gas prices could spike as high as $8 on the Februray contract. If so, the longs would get the $15 UNG that they are pleading for.

      • 1 Reply to contrabobble
      • Contra

        It all depends on when and where the price spike occurs. It could occur in Jan-Feb contracts but not the Dec and UNG holders wont have shit to show for it. I doubt somehow that scenario would play out.

        I just posted probabilities of UNG prices per options and my estimates of NG prices for the Dec contract. Not how I am placing my bets but I think by Nov 20th I will be within range.

        Wolf

    • Mr. Wolf not as smart as UNG shareholders.

    • Wolf,
      Update on my Appl stradle. I set the stradle up mid day. Strike was 185 and I only did 1 contract each. I was thinking bearish and actually purchased the PUT at 190 strike.
      Glad I did'nt forego the Call position because of my last minute Bearish gut feeling.
      Should make a nice profit Tuesday if nothing crazy happens prior to market opening.
      I was going to straddle TXN, but had a busy day at work, so didn't want to rush into other positions. Especially being new at this.
      In regards to UNG, just want to say, this slow climb upward is perfect for me. Lets my covered calls work, while I make a little each day on my long positions. Just don't want a crash. Doubt crash will happen before Spring, I will reassess my positions in February.

      • 2 Replies to do.john67
      • Do.

        I was looking at doing a bullish put spreads of 175-165 in Dec 09 with that funding a vertical call spread position tomorrow.

        I like your trade set up especially in hindsight of earnings. Though I would highly highly recommend taking a profit in the morning if you have a good one your happy with. Look at what INTC did after hours (crushed it) followed by a much less move at open AND then started to work down (believe its currently lower PPS than it was before earnings came out).

        I think GE is a good example as well, its pretty much sucking wind.

        Also for AAPL your going to have volatility sucked out of those options in a very harsh manner come tomorrow and is one reason to take the profit when/if you have it.

        The trade setup I was thinking was when AAPL was at the 185-186 handle but I had a meeting and by the time I came back it had moved up enough for me to relook at it and decided against it.

        As for UNG, if your long UNG and I cant convince you otherwise doing covered calls is a decent way. Though I would be recommending a collar (sell covered call and buy put option with the proceed).

        As an offset I dont know what level your account is or how it functions but you can do this instead of "owning the stock".

        Buy the $8/9 calls in a month of your choosing as there should be minimum theta/time value in those. You may pay $4.00 for those calls but you can "sell calls against the calls" and is a much better use of capital. You can control 100 shares of UNG above 8/9 for $4.00 rather than have 11.60 tied up in capital OR a ratio of controling 300 shares to 100 current shares. I wouldnt load the boat all in one way in case UNG plummets then those calls would probably be worthless depending on the month of your choosing.

        If I were long and trying to replace the stock I would implement the Bull Vs Bear November Trade Post I recommended. Look it up might be a good thought process for you to look at and tweak it same. Either way it was for academic purposes and come expiration in Novemember I will see which trade won :-)

        Wolf

      • Do you make any good money now?

        I sold all my TXN position.

    • You are too ignorant to understand the power of technical rebounce. You'll miss the rally. End of story!

    • No bad. pack in few k today.

      Sorry for no time to ready your stuff!

 
UNG
13.22-0.34(-2.51%)Jul 6 4:00 PMEDT