April 5, 2016
Buy Natural Gas
The last thing I am is an expert in the Natural Gas market.
But…I have been watching it drift lower and lower and lower for several years now, knowing basically that there was plenty of it around…but still knowing at some point it has to be a buy…
I also know that every $1 move = $10,000 per futures contract…and while I am NOT sitting here thinking it will rally $5-$6, I do think that $1-$2 on the upside CERTAINLY looks like a decent possibility.
What do you think?
And when I put those numbers together with what call options cost, I think this trade has finally reached the point that I want to be in it.
So, here ARE the numbers…and my perspective as to how to go about doing this…
My recommendation is to buy this option now.
If by June 1st it has either gone sideways or lower…Buy the market again, essentially using the same 240 strike (or maybe lower), at pretty much the same price…but with another few months of time (December).
My premise is that this market is now ready to go up (like a number of commodities), and with prices so, so low, it just makes sense to adopt a strategy that incorporates adding to the position if it does “lay around” any longer.
I would also add that I think your biggest challenge will not be in spending the money…It will be in trying to just sit tight when/if the market does get it going on the upside…to just let the trade happen and see if it CAN get to $3.50 or $4.00.
Call if you want to talk about it…Lots of ways to go at this…with other options …or even futures.
All options recommendations in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Natural Gas