I understand Short position was so high in UNG due to their decision to stop issuing shares and the 11% premium on shares (units) to underlying value.
Tonight I heard on Fast Money that UNG has reversed their decision and will again start issuing shares (units). The premium should disappear and shorts who shorted due to this imbalance will go away.
May be wrong but expect this is bullish for Nat Gas. Very short term bearish for UNG but it will bounce back quickly and I suspect push up the price of Nat. Gas.
I'm neither long or short UNG but am long HNU, so I'll be happy if Nat Gas goes up again. Its certainly about time!
Hi. Unlike you, I am bearish on NAT GAS and is a NAT GAS short with no position (long or short) on UNG.
I am really not sure what is going to happen to NAT GAS on Monday with the roll over from UNG and this new 8K from UNG.
I can say I am reading the 8K from UNG to try to understand it better. (It is a mouthful.)
I believe futures pit NAT GAS traders are going to read through that 8K and try to figure out their game plans. I don't think they are going to rush into anything Monday morning as UNG is not going to do anything until the 28th. They are probably going to feel out the market and consult among themselves at least for the first part of the morning.
That is why I will wait for this premium to disappear and then buy UNG as long as NG is still in this range. I am bullish NG for the long term but don't want to be killed with the double-whammy of the premium and contango eroding this. I think buying this in the $9s is a safe bet. This will be back in the teens soon enough.
Well, it's hard to answer your questions...because we don't know what is your time line.
But UNG is pretty much like USO. USO prices recovered when oil started a new bull market. UNG & USO operate very similar, front-month roll-over.
When oil fell hard, the contango costs USO dearly.
Same situation with UNG now....until NG prices recovered.
If you have a long timeline in JAN-FEB, it's wise to buy UNG before that time. The bull camp in NG predict, NG will be in bottoming process...until NOV-DEC. Its prices must trade between $3-4 for 1-2 months to confirm the new bull market will start....The shorts will also see this, they will cover. The seasonality reasons also help to push NG to $5 in JAN ...$6 in FEB.
No reasons not to believe if NG double, UNG can't go up 50%...
My TG for UNG=$15-20 in 2010. FEB is the best time!