Commodities

Unusual Options Activity In Natural Gas ETF, UNG

Earlier this month I noticed natural gas hitting reaching a longer term base and reversing direction. 

Natural Gas Analysis Report 9/5/19 - A Bottom Has Been Put In

Natural gas put in a hammer, reversal candle, which usually occurs at the bottom of a down trend. On the daily chart, price formed a demand zone, on top of a demand zone.  Thus, the chart suggested to go long during a pull back to the daily demand zones with a target at the daily supply at $2.700.

Price never pull back, but did hit the daily supply and is falling now.  Because the demand zones were never hit, they are still in play.

The United States Natural Gas Fund (UNG) is an exchange-traded security designed to track percentage changes in the price of natural gas delivered to Henry Hub, Louisiana, the main U.S. benchmark for natural gas.

Yesterday I noticed that the Smart Money bought over 29,000 of the Nov 15 call options with a strike price at $21. 

Because UNG follows the natural gas futures, the charts look very similar.

And based on the seasonality of natural gas price acting bullish from the Fall to the Winter from a technical standpoint, but also from a fundamental standpoint, I love the trade.  Thus, the Smart Money should have no problems being profitable on this trade. 

Source

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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