Sold 1 NG 4.5 Jul Call for 0.158

NG is moving higher, so I sold 1 July 4.5 Call for 0.158 or $1580 creating a covered call.  The fun part of my position trading strategy starts when I can sell call options. 

I'm currently holding 3 long futures outright, 1 Jun 3.5 put option and 1 Jul 4.5 call. If NG keeps moving higher, I can exit the Jun 3.5 early (currently +1900). I also plan on selling more calls at either higher premium or higher strike price. If NG turns around and drop, then the $1580 premium I brought will offset the carrying cost bringing the break-even point. 

The July options have still about 50 days to go, so I have to sit on it for quite some time. 

Swine flu

I forgot to mention about the swing flu. Thanks for that.

Because of that, travel industry is getting hurt a lot. Airlines require oil to fly their planes, so oil goes down and what's nat gas going to do. Since it's the weakest in the oil industry even though there's no nat gas plane, it gets sold off first. 

Lumber is not only related to residential building but more importantly a lot of travel related buildings, for example, hotels and vacation homes. People are very fearful about doing it and lumber took a big plunge yesterday....... and today.

FOMC announcement is coming out at 2:15PM ET tomorrow as usual, so be cautious. I'm looking for markets to move higher generating a blow-out top. We're really close to the top. 

Lessons

Simply amazing. I'm learning a lot of lessons from the markets I'm in. In nat gas, I'm trying to catch the bottom and there's a basement now. Maybe there's an atomic shelter under the basement if I continue to try to catch the bottom. There are lots of argument about inflation v.s. deflation. As far as I can see, there's only deflation. I think nat gas' price is back to 1980's. Nat gas companies started to shut down, but this is going to take at least a year to kick in. I hope I don't get a margin call. 

In lumber, I tried to be smart. Instead of adding when it's going down, I waited for a higher high(s) / higher low(s) and then I added on a pull back. It worked nicely.... for about 3-4 days. As stated, it happened that I provided good liquidity to the markets for who wanted to short. Now it resumed its downtrend again. 

I honestly thought this kind of strategy would fit my trading style. But it's not for sure. Once trend is established in commodities, wow, it's just simply amazing.

What hurts more is, I talked about cotton and orange juice. I decided not to take those trades because I thought if they take off, chances are lumber and nat gas would too. I was completely wrong. Cotton and OJ took off their lows and I would say at least $5000 per contract per market. 

The beginning of April was great. I was very close to making up all the losses I had this year, but then it turned and started heading south now losing yet again a record loss per month basis. 

I'll let all of my positions alone at this moment. Fellow traders I know think deflation process will continue until the end of the year before inflation comes into play. Hopefully I will be still holding my positions at that time....

NG offset

May NG options expire today. My 3.5 put will likely get assigned, so I offset and roll-it over to June by selling 1 May NG outright and buying 1 June NG outright.

Sold 1 May NG at 3.167

Bought 1 June NG at 3.279

Sold 1 Jun NG 3.50 put for 0.305

Let's see how low this nat gas will go. 

My order to sell June NG 3.5 put was filled today for 0.305 or $3050.

Markets

Have you ever felt like you're never going to get out of a position that you're holding? I feel like it with my lumber and nat gas.

I added more on those. I tried to be smart by adding onto a rally, but in a big down trend, I guess that's where shorts would add their shorts and I kindly took those shorts. Bummer. As soon as I added, of course, lumber resumed its downtrend.

Nat gas continued to get hammered. It was 12 just a few months ago, and now it's 3.5. It lost over 70%! I have no execuse on this because I'm trying to catch the falling knife. On upcoming trades, I'll probably wait for a trend change and try to get the meat in the middle using 'stops'.

Well, it's been a good exercise and I think I'm much better off using stops instead of hoping to turn things around waiting for months and months. Besides, I don't have unlimited money.

I might add 1 more level or so, but other than that, I'll just let it run. I need to be prepared for further downmove. Carrying cost kills me, so even though, I'm adding essentially, I'm not making much money.

Sold 1 NG 3.5 May put for 0.105

I brought $1050 premium (less commissions ) for NG. There are 10 days until expiration. I have another order to sell June 3.5 put, but to get that one filled, I think NG has to drop another 0.3 or so. 

Corrected from 1.05 -> 0.105 (thanks boogster)