Buy Alert: October 25, 2013
Buy Alert: October 25, 2013
Option Strategy:
Buy US Natural Gas Fund (UNG) January 2014 $19.00 calls for $1.10 or better.
Commodity Outlook: Natural Gas
We have to be quick this morning…
Natural gas put in a bullish reversal in Thursday’s trading session. That’s in spite of the fact that EIA inventory data came in stronger than expected yesterday at 87 bcf.
In a nutshell, the bullish price action means investors are preparing for a very cold winter.
At $3.67 mmBtu this morning, natural gas has plenty of room to rise in coming months.
Here are the important details you’ll need for this trade…
Trade Metrics:
| Underlying ETF Symbol: | UNG |
| Call or Put: | CALL |
| Expiration Month, Day, Year: | January 17, 2014 |
| Strike Price: | $19.00 |
| Current Bid/Ask Price: | $1.00/$1.03 |
| Maximum Buy Up To Price: | $1.10 |
| Maximum Risk Per Contract: | $110 |
Here’s a breakdown of the important technical support and resistance zones in natural gas…
Exit Strategy:
Remember, we want natural gas to move higher. Our first profit target is $4.00 mmBtu. If colder than average temperatures grace the US in December, we’ll likely see this commodity jump to $4.20 or higher.
The risk control price is $3.45. If natural gas drops below that level, conservative investors should consider closing this trade to reduce risk.
Category: Commodity Trading
