Buy Alert: October 25, 2013

| 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…

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