Morning Thoughts – Oldinvestor

Daily LNG export demand on pipelines at RonHenergy.com

Ouch! I saw some news of flooding around Houston. I’m guessing the Tropical Strom/Hurricane Beta may have caused this disruption with Sabine Pass and Freeport. Cameron has now been offline for almost a month. The chances of prompt pricing panic I guess are once again considered a possibility for many more than myself. Production has fallen back to May lows. I don’t know what regions are doing what, it almost doesn’t matter. If all areas of storage are filling as quickly and storage is already 90% of capacity, it’s simply a problem for everyone, not use South Central. Keep in mind, I feel like I’m speculating more than usual here.

I’m glad I made gains on BOIL and will be ready if the market does finally pop and move higher. This lower for longer idea may really take its toll on the market next year or even into 2022. If you want a discounted contract, summer of 2022 contracts are pretty cheap, around $2.5/MMbtu. I’ve got my long term play, UNL. I’m giving the market a little more time to see if it will keep up this pressure on pricing. Prices are probably repsonding to what’s happening now, so next week’s EIA report will not be such a surprise. If LNG doesn’t get its shit together again, and more quickly now, Henry Hub pricing is about to get a lot more interesting. Currently $1.45 or something? haha

I’m just going to continue to watch with my current positions. I’ve found another typo on my spreadsheet. I had SLB expiration for 9/25/20. I’ve corrected this to 10/09/20.

My positions and P/L as of this morning, 9/23/20

All three of my positions are currently held in my Webull example account. I have roughly $2424 in this account and it’s approaching a record loss dollar-wise. With UNG and SLB covered calls, these are fairly big positions for this account. So the pain will be greater to the account when they are hurting. I’m just below my breakeven for each UNG and SLB, but I’m thinking in a few weeks, with some help from rolling forward the call, I’ll be at a gain there. UNG is anyone’s game with Gas getting hammered. I may loose my shirt on that one if storage gets as bad as I keep crying about. We’ll have to wait and see. I have gotten away from giving a % of my account that is invested in a particular ETF, since this is not quite easy to do when options are involved. If I took the full cash value of my break-evens. $1746 for SLB would be 70% of my funds in SLB. $1190 for UNG would be roughly 47% of my funds for UNG, and roughly 18% for UNL. This is 135%… Exactly. I’m using margin, and I’m about $800 away from a margin call if things get really bad. I don’t think UNG will get wiped out, but it’s going to be a horrible roll if I don’t do something about UNG.

Ok, so I just looked at rolling my UNG down and out, and that option seems to suck, but could be helpful to sustain a new breakeven. I will be sacrificing almost all my profit (potential profit), depending on how far down I roll the call. Expiration is still roughly 23 days out, so… maybe roll out to 10/30/20 and down to 12 strike from 13, gain roughly 50 cents, and give myself room to roll again if needed. I’m going to try this today. Something that I don’t like about Webull; the web based platform, anyway, will not trade a “covered call” as 1 trade. I have to buy the shares and sell the call after I buy the shares. To roll a contract out, I have to buy the call back, then sell a new call manually. Most brokers just allow it in 1 order. Anyway, look for me to roll out and down on UNG today to a strike of 12, and out to Oct 30, 2020 expiration. Good Luck

Oldinvestor