Morning Thoughts – Oldinvestor

LNG is still lagging. No boats at port at Sabine Pass or Cameron. It would appear there is only a boat at Corpus Christi at the moment. RonHenergy.com shows each LNG export facility right from the home page. Sabine Pass and Cameron are still not taking any gas into their plants. Any day now they will start back up. I’m thinking prices will only grind higher once this happens. Momentum is still in favor of bulls though it has slowed.

That’s all I have for today as nothing much has changed for me. I am still considering making a change to my BOIL 50 strike covered put, but I have not made any changes yet. I’ve got other positions keeping that account in great shape and I could withstand some disappointment from BOIL. 90 strike covered puts for December expiration are prices well now at near $500. The hard to borrow interest rate would have to be like 40% to wipe out that gain in the next 15 weeks. So as long as BOIL stays below 90 by mid December…

UNL – still 50% invested with an average of $7.4

BOIL covered puts

Covered puts P/L as of market close 9/2/20

I’m starting to feel the pain now with BOIL. I really need to hold out for BOIL to roll into NGF21.

Seasonality of NGX/F

There is a lot of contango from November to January contract. More than normal. So even if the market moves a little higher, BOIL is going to lose a lot of bull ground when it rolls to January contral. That is, as long as November doesn’t skyrocket in the next few weeks. This could happen in a similar way as last year. I’m really only a bit nervous about 50 strike put in BOIL. Lets look at it this way. Storage will still be high when the next roll happens for BOIL, this should keep pricing a little more suppressed. It is the reason Oct is still down at $2.52/MMbtu. There’s still plenty of gas, so why should October contract get any help. That being said, there are still two months before November expires and LNG exports are about to ramp up.

One might argue that this is already priced in. I say it isn’t fully priced in. I think this market has been so complacent, and trend following, it goes higher when LNG gets closer to exporting record numbers again. So what options do I have with my 50 strike put? I think I’ll try to roll the strike up to the max of a 70 strike for 3/19/21 expiration and my max profit will still be $600. I will sacrifice $400 in max profit, but add $20/share ( or $2000) to my protection. I like this trade off. Now it is a matter of what kind of premium I can trade out for. I may not get close to the $600 potential for max gain, but I’ll be ok with that. I’m more interested in the protection at this point, and i can always roll back down if/when I feel the need. I’ll be looking to roll my 50 strike put to 70 this morning. Also this has shown 12/18/20 expiration and it has been 3/19/21 this whole time. My other to puts are 12/18/20.

It’s EIA day. Good Luck

Oldinvestor