Sold Nov NG 5.00 Call for 0.335

Today I sold 1 Nov NG 5 Call for 0.335 or $3350. I also rolled-over all of Oct NG to Nov.

Sold Nov NG 5.25 Call for 0.211

Today I rolled 1 NG contract to Nov from Oct and also wrote 1 Nove NG 5.25 Call for 0.211 or $2110 less commissions. Oct options expire this Friday. The value of my Oct 4.25 call is worthless right now. I hope NG stays at least at this level or higher, so that I can write another call tomorrow or Friday.

Sold 1 Nov 5.25 call for 0.231

I would have gotten at least $2500 premium, but I was impatient and got only $2310 less commissions.

Sold 1 Oct 4.25 Call options for 0.065

I just sold to bring some extra premium of $650 less commissions. This options expire in about 10 days.

Sold 1 Oct 3 Call options for 0.605

Today I sold Oct 3 call options for 0.605. I paid 0.16, so the profit on this trade is 0.445 or $4450 less commissions. I put orders to write Nov call options.

Getting prepared

Another NG news and another disappointment.

Today NG inventory report came out and it increases less than expected, but NG is -7%. Pretty much during whole Aug and on, without any any pull-back, it keeps going down along with my account size.

Accordingly, I'm getting prepared for the last day of my long term trades. I've been holding lumber since Jan 2008 and nat gas since Dec 2008. The reason for this failure is the fact that I over-traded. My initial plan was to prepare for less aggressive scale-in, but at one point I thought chart patterns look good, so I bought more.

Anyhow, I plan on taking some time off from trading and work once I get out of those two trades.

Bought 1 Oct NG 3 Call

Calls are definitely deflated right now. Instead of buying futures outright, I bought a 3 call for 0.16 or $1600. 3 Call is only 0.25 away, so I thought this was a good deal. Should we have a bounce to even 3, this call should cost about $3000 pretty quickly.

Some interesting things about NG

As I've been holding NG for a while, I found something interesting.

1. Spread.

I see more and more of this. The front month gets sold off quicker and bought slower than the next month. Last month, the spread between Aug and Sept started about 0.3 and by the time the Sep expired, the spread became 0.4. If I rolled over in early Aug, I would have saved $1000 per contract compared to the last week of Aug (Sept NG futures expiration).

Just today, I watch the spread between Oct and Nov NG contracts. Currently, Oct NG is +0.010, but the Nov is +0.072. The Oct is lagging by 0.072 or $720 per contract.

The solution I found was to roll-over either early or do not trade the front moth contract. Of course, if the markets take off, usually it starts from the front month, but it gets sold off a lot quicker as well.

2. # of rigs

I also keep an eye on the # of Nat gas rigs. You would think if NG price goes down, they should slash the number of rigs, but interestingly the # of rigs keep going up. No wonder NG price keeps going down. While we're at multi-year history in NG storage, they keep producing more and more!

Unless.... since the price of Dec contract is close to 5, there's no reason to sell now, so just produce and store until December. Or it could be that things are getting better, so they keep producing more. I don't why honestly. All I know is NG price keeps going down. As a matter of fact, we went down almost $2 in the last month or so with so many days of consecutive losses, which I've never seen any markets especially in futures.