Morning Thoughts – Oldinvestor

Production is back. The disruption from an unplanned maintenance event a couple weeks ago has recovered and production is trending up again. I think it’s hard to say where production will level out.

Production levels as of 7/24/20 from HFIR free article

The above photo is linked to the article it comes from that was posted last Friday. The article focuses on demand and the inability it will have to fill storage to max capacity. It should also mention something of production since these charts were shared.

Either way, production is recovering. A quick search for LNG cancellations only brings up news that is 5 days old, so I’ve essentially got nothing. Production is potentially rising and hopefully LNG is as well. Storage builds have been bullish, and weather has actually been helpful in the south central region. But South Central generally has draws on storage this time of year.

Weekly South Central Inventory 2020 vs 5 year average at

I’m still keeping this in my back pocket. A 3Bcf/d curb in LNG cancellations are almost necessary at this point. I will remain 80% in UNL for this reason. However, if storage for South Central begins to flirt with maximum capacity, the opportunity could be huge once the risk subsides. For now I’ll hang on to what I’ve got.

My positions

UNL – 80% of my max comfort invested and waiting still.

BOIL and KOLD covered puts are back to the original state

BOIL and KOLD covered puts

So I re-entered my KOLD short put to make KOLD a covered put again. I added the $2 in premium to “sum of roll premium”, and my profit is booming now. This is exceptional for a trade that cost less that $10,000. More than 10% in a couple months. A large portion of the profits have come from a good choice in direction of NG, but that can’t be avoided. Fundamentals and a good sense of market direction is still required to make it; even with options. This one particular options trade has certainly helped turn a scary directional trade into one with a little more stability. Since I believe the market is still weak, I”m going to keep my covered put in KOLD like it is for a while now. If the market decides to rocket up, I’ll make money, and if it falls, I’ll be better protected. Good Luck