Morning Thoughts – Oldinvestor

Production is settling into a holding position; so is LNG. Powerburn has been incredible this week, and is probably responsible for the strength in pricing right now. Storage did increase vs the 5 year average in yesterday’s EIA report of a 58. If storage follows the 5 year average to EOS, this equates to 4194Bcf in storage on week 45 (November 2 – 8, 2020). This is not bullish. I may be waiting forever for BOIL to even reach $50/share. I think I over estimated by selling 90 strike put.

I have to give Josh Heller credit for getting me to think about storage more. He would say, “even if LNG causes the market to be under-supplied (vs the 5yr average) by 3Bcf/day for the next 13 weeks, this is still only 273Bcf difference, putting EOS at 3921Bcf in storage on week 45.” The 5 year average for storage has ranged from 3720 to 3873Bcf over the last 6 years. Here…

5year average gas inventory (storage) over the last 6 years at RonHenergy.com

I expect range bound trading at best here, don’t get too bullish. I should consider reducing my UNL. I won’t do this, because i believe the rest of the curve will give UNL a boost soon enough. I want to ride that one out. If I do get the drop I want, I will add back into UNG.

My positions

UNL – 50% in with an average of $7.4 – holding forever….

BOIL covered puts

BOIL covered puts as of market close 8/13/20
Covered puts P/L as of market close 8/13/20

Looking at this right now, it might seem ridiculous of me to trade a 90 striked covered put against BOIL. It is simply there on the chance the market breaks out. The reality is that the profit may only be enough to cover the hard to borrow interest for the 6 months I’ll be holding the shares short. Maybe… If the interest rate stays below 3% for 6 months on say $4000 worth of a BOIL short, that’s only $60 in interest. We shall see. It is worth the wait to me as this trade is off to a good start with KOLD making sweet profits, and I am diversifying by taking more than just the 90 strike put.

I know I said on Wednesday I would be waiting, and then i took another covered put. haha! But today I will not be trading. The market could dump or jump I guess? not gonna happen without some major news. On a lighter note, I did trade a WMT covered call this week. 131 call for $3 premium, and 8/21/20 expiration. I like it. WMT has been packed as ever where I live, earnings should be somewhere between fine to awesome. Good Luck

Oldinvestor