First, here is an update of my positions and account balance. My account balance is suffering along side the weakness in natgas pricing.
I believe there has been strength in production, and this is not going away as oil is back to driving associated gas output higher. Already! It is apparent that even a slight increase in production is not welcome. Prices were below $2 a year ago, so the deficit to the 5 year average is priced in. It’s been a year… geez
UNL will be below $8 today, I am a buyer.
Instead of buying UNL, I am exiting UNG. I am shifting away from shorting UNG, and more toward BOIL. The hard to borrow interest is far higher with BOIL than UNG, but so is the decay.
Since UNG has a tight Bid/Ask Spread, I exited now, at $9.47/share.
Now I’ve exited UNG, I will hold here for a bit longer. If the natgas prices continue to tumble, I may exit BOIL. The original plan was to hold the short position longer term, but some opportunities are too good to pass on. Instead of increasing UNL, I will reduce BOIL. It will be a while yet. As for today, no more moves. I’ll wait now. Good luck
I don’t really have a lot to say, I was looking through some screenshots of my positions and found when my account balance was similar to my current balance. Just thought it might be worth sharing. The overall market currently is lower, and I’m long biased on the trade, so decay must be working a little as my balance is 47 cents away from my March 3rd balance.
The Top image is the trade from March 3, and the next image is from early this morning (March 9). I may be splitting hairs, but I don’t have much else to point out. I just need to give it more time I suppose. I do half expect the market to move fairly slow, and possibly lower from here. I’m already watching for a a point at which to buy more UNL. Patience though; it seems the market is still heavily supplied, and if Oil prices are nearing $70/bbl, the areas of Texas will be back to paying to get rid of gas in order to sell the oil. Maybe they should pay residential/commercial/industrial recipients to take it…
Here is the same timeline from March 3 to now. It doesn’t tell much. I do have a line marked on the chart from when I first shorted UNG.
Ok, From Jan 6, 2021 to now; this would be long UNL, short UNG only. UNL seems to be beating UNG at this point. It is only by a small margin. By my rough estimate that I needed 1.8 times the amount of money invested in UNL to help balance out a UNG short position.
I shorted $95.7 worth of UNG on Jan 6, or 10 shares.
UNL was at $8 at some point that same day. So 1.8 times the $95.7 of UNG = $172.26, divided by $8 per share = 21.53. I’ll round up to 22 shares for long biased trade (cost of $176).
Based on the latest values of on Tradingview, UNG is at $9.95/share and UNL $8.11/share
UNG would be at a $3.8 loss while UNL would be at a gain of 2.42.
I’m still at a loss overall
I’m seeing now on the hourly chart, UNG is still at a gain to UNL, plus I sold UNG at a lower price than shown on the chart.
If I adjusted my values of entry (UNG to $9.74/share and UNL to $8.01/share), then UNG would be at a $2.1 loss and UNL at $2.42 gain. Bid/Ask really took its toll on this trade, since we are splitting hairs that is.
The Bigger point!
A bigger point I wanted to make is the interest. UNG has fallen under Hard-to-borrow ever since UGAZ was delisted it seems. the rate has been around 2.3% annualized through Webull. Schwab has a better interest rate, but I’ll use Webull’s rate since that is where the trade is being held. I’m sure there is a calculation somewhere to officially tally the interest, but I’m going to wing it with 365 days in a year and count weekend days. 2.3% divided by 365 would be is 6.3^10-5 per day; multiplied by 61 days = .3843835% times roughly $100. Since UNG has been up, my short position would have been valued at higher than my entry. From the hip I’m going to say the value was $100 and the interest that I’ve paid to Webull is roughly $0.38 since Jan 6, 2021, as of today.
Sooooo…. Even if I got a perfect entry and was up by 31 cents this morning, I would be down by 7 cents due to the interest that I owe to Webull. Hmmm, after looking through my February accounts statement, I am not seeing anything about interest paid, margin paid, hard to borrow…. Anyway, my point has been made, it has not been a good 61 days for UNL vs UNG. There has also been low contango in this same time frame. Had I taken this trade the 6 months prior to when I did, I would have undoubtedly made money on decay; that is, had I not gone too heavy on UNL.
ok, I’ve successfully turned a quick update into a long drawn out rambling about 1 trade. I gotta go do real work stuff now. I will be watching to add to UNL, but in no rush as I’m already long biased. Good Luck
Yesterday was such a mess at work, I was not able to look at the market. Sometimes life just pulls you in a direction and you must simply push through. Let us hope today moves a bit more slowly.
Nothing much has changed; I remain long biased with positioning of UNL quite high in comparison to UNG/BOIL. I think I would prefer to hold more BOIL and less UNG, but I am going to wait to see if the market moves higher before I make any changes.
I remain boring and positions unchanged. I’ll refer to my last post for anything interesting. Good Luck
I saw something of a bullish weather related shift. I am on the fence as to whether or not to add more UNL. I think the market still needs time to settle from the winter blast. Production:
As we can see, the production numbers are quite out of alignment. Demand is the same.
Either image shares a link to the BlueGold Trader article the images came from if you’d like to give them a visit. Anyway, as you may have already seen and heard, the market swung hard to under-supplied for quite some time. According to Bluegold, the market nearly swung back to a balanced market. At least this is what the data they are receiving shows. This data is only a sample of the entire market and may be harder to trust than in times of fundamental stability.
It does appear the market is settling down and with a Sunday gap up, the market may be interested in a bottom here. Based on EIA info, $2.75 is getting quite close to a historical low vs storage. Also, the light blue dots are 2019, when storage was building faster than the 5 year and the market was anticipating more of a surplus. I would say right now it is hard to tell which way the storage scale will tip. I think power burn will be ever more important this summer. LNG will of course steal the spotlight if there is another LNG global glut. I’ll be keeping these in mind when summer approaches.
As for my positioning………..
Based on this move, which is a rather strong one, UNG can move about 1.83 times faster than UNL, and BOIL 3.44 times faster than UNL. I did a quick calculation in excel.
Based on the amount of UNG ($95.7), and BOIL ($23.86) that I’m currently holding. I would need roughly a total of $257 to offset these short positions. I am currently holding $406.05 purchased shares worth of UNL, which would make me clearly long biased.
gotta go, apparently all hell is breaking loose and I must go.
I will be holding my positions steady today. Good Luck