Options

I was thinking about my natural gas trade today. As natural gas slowly move up, I started wondering when my call will get filled. Shortly after, I realized that I made a big mistake. Early Feb, it ran to 4.9 and at that time I was trying to sell 5.25 call for 0.3. That call got to 0.26ish and I barely missed that sell. What I should have done was instead of selling March 5.25, I would have sold Apr 5.25 for 0.45 ish. I was focusing only on near term (30 days or less) options.

The current price of nat gas is about 4.335 and Apr 5 call I'm trying to sell is only going for 0.068. There's no way I'm going to bring 0.3 before 3/26 expiration unless it goes in the money. On the other hand, May 5 call is going 0.183. Should nat gas rally another 0.5 or so, I should be able to bring 0.3. Remember once markets trend up, calls get inflated and I may be able to sell 5.25 call. The downside of this is, the May expiration is almost 50 days away and once I'm filled, there's nothing I can do.

By the way, the Apr 4 call I sold for $3100 is not worth $1300, so I'm +$1800. I'll let this one either expire worthless or get assigned. However if we rally in next 5-7 trading days, I'll look into exiting at 0.02.