The price of natural gas has held relatively steady in recent weeks.While this is good news for investors in the commodity, contango is now back in full force.
Contango means very bad enws for UNG as it has to pay more every month to roll over its
contracts: same money, fewer contracts. This is buyer beware.
This is however, hurricane month and season, all the makings for a very interesting - and volatile - combination. Just near perfect.
Below are straddles for UNG for both September and October 2011. These allow an investor to profit either way, up or down.
September only has 2 more days to go and is an obvious extreme risk. October requires an 8% move or so for the position to become profitable.
This is not advice. Options are very dangerous and may cause 100% loss. Please do your own due diligence.
No comments:
Post a Comment