LB and NG update

Today I rolled over Mar Lumber to May contract. I've been using pit contracts even if CME launched electronic contract in late 2008. Pit trades really suck because I have no idea where the current bid/ask is and I don't know if someone (even my broker) is trying screw me.

During my last roll-over, I was holding Nov long and I sent 3 sell orders. After about a few mins later, it showed last price was at my sell, so I thought I got filled. In pit trading, usually the # of contracts doesn't really mean much because it's very liquid. I, then, went bought 3 Jan Lumber and I got filled because I saw last traded price was below mine, so someone also got filled below my price.

Another thing sucks about pit trading is you don't get confirmation immediately. It takes about 2-3 hours. Later I found that my sell didn't get filled, so I ended up holding 6 lots of lumber instead of 3. Furthermore, Lumber kept dropping and my on-going loss suddenly became -$3000+. Fortunately lumber came back up and filled my sell.

Long story short, I'm now more comfortable trading lumber in electronic markets. The bid/ask spread is still wide, but at least I can time when the spread gets smaller to roll over.

Lumber continues to drop and it's at the point where I would aggressively buy. I plan on buying 2 lots at a time from this point. Margin is only $1100 per contract.

Sold 4 Mar lumber at 142.5 (1 will offset 170 put at expiration)
Bought 4 May lumber at 153.025

As for natural gas, I'm still holding 1 long outright and 1 short Apr 4 put. I have an order to sell Apr 5 call for 0.34 (or $3400).

To be honest, I'm down quite a bit and it gives me a lot of pressure / headache. I looked at monthly charts on all commodities during 80s stock market crash / 2001 dot com bubble burst, but commodities don't seem to be affected. The tricky thing about this market is, it seems when indexes go lower, it triggers margin calls, which in turn forces liquidate other commodities first. Besides, it usually takes a while for commodities to turn around. It could spend a few 'years' basing before shooting higher. Hope I have enough money to hold on to. This strategy is definitely not for someone who's not patient.

Sold 1 NG Apr 4 Put for 0.310 (or $3100)

Natural gas report came out pretty bad, so it tanked to $4 ish and I got filled on 1 NG 4 Apr put for 0.31 or $3100 premium. My break-even is now 4.236. NG can go below below 4, but I'd be very surprised if it'll drop below 3. I'll sell 2 more at 3 should we get there.

Apr contract has about 4 weeks to go, so still plenty of time to decide what calls I want to sell. I still keep 5.25 Apr call if we rally.

NG update

I rolled over my natural gas position:

Sold 1 Mar NG at 4.418
Bought 1 April NG at 4.430

I also placed the following orders:
Sell 1 Apr 5.250 Call for 0.340 (or $3400)
Sell 1 Apr 4 put for 0.310 (or $3100)

Markets

I'm not doing much. I keep an eye on markets, but there's simply no direction. Since stocks are not moving, all other commodities are not moving either. I'm still holding NG and LB. NG is hanging around break-even point. I'll roll over early and try to sell Apr puts. Lumber went as low as 139ish and had 3 limit up days. It then again went down, so now being traded around 155.

I'm not sure if markets are trying to bottom out here or test the low again. The best possible case is we have one extreme hammer day to run stops and close above the open.

Bull markets are usually very slow and small ,and bear market rallies are fast and big.