United States Natural Gas Fund (UNG): Options Gone Wild
Traders are having a field day with the United States Natural Gas Fund, LP (NYSE:UNG) options, both calls and puts, the race to place on bet on Natural Gas is on and its worth millions. At 2 PM EST, 48 million UNG shares have traded hands, that's more than double the normal volume. The June 09, July 09, and Oct 09 UNG options are all buzzing today but the Oct 09 $14 Puts has a staggering open interest of 155,954 that truly takes the cake.
Yesterday the Masters talked up Spidey-Sense and the UNG. Even as oil prices fell today, natural gas prices surged more than 8% - can you say speculation.
Other than the fact that natural gas prices had fallen so far, there seemed little reason to buy it. The latest index of manufacturing in New York indicated that demand weakened yet again. Manufacturers, major users of natural gas, have slashed thousands of jobs.
Spiking natural gas prices would be a concern for everyone, from the heavy industries that use it to power factories to consumers who use it to heat their homes. Yet traders with Spider-Sense are betting natural gas prices are headed up yet hedging their bets by buying calls and puts. Why not enjoy the volatility of the UNG and cash in while shares bounce all over the place in the next few weeks and months? Expect more money to rush into this fund, its on like Donkey Kong.
The activity speaks for itself on the UNG options today (6/16/09), this has no doubt been the trade of the week:
|Options Expiring Fri, Jun 19, 2009|
|Options Expiring Fri, Jul 17, 2009|
|Options Expiring Fri, Oct 16, 2009|
More on the UNG:
United States Natural Gas Fund, LP (USNG) is a limited partnership. The Company is a commodity pool that issues units that may be purchased and sold on the NYSE Arca, Inc. The investment objective of USNG is for the changes in percentage terms of its net asset value to reflect the changes in percentage terms of the price of natural gas delivered at the Henry Hub, Louisiana, as measured by the changes in the price of the futures contract on natural gas as traded on the New York Mercantile Exchange (the NYMEX) that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month contract to expire. USNG invests in futures contracts for natural gas, crude oil, heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other United States and foreign exchanges. The Company’s general partner is United States Commodity Funds LLC.
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