Morning Thoughts – Time to reduce?

My positions as of pre-market 1/4/2021

It’s 2021, woo woo. Ok, it’s really just another day. My account balance is up! This is nice. Though it appears I shouldn’t have sold a call. This is alright. I half expected this.

First off, weather is bullish right now. and…. well… never expect bullish weather to just linger. once or twice a year it gets cold and stays cold longer than expected. Same with bearish weather. Generally it swings wildly between the two.

Prices got unbelievably low and I got in. I’ve now gotten what I wanted ( a dollar rise in UNG), it’s time to look for an exit. Had I not sold that call to make my UNG position a covered call, I would be selling UNG right now at $9.5 and continue to hold UNL for a chance the market would push higher.

re-phrase – had not sold a call I would exit UNG now at $9.5. with $1 gain and would now feel comfortable to continue to hold UNL. In fact, I may also reduce UNL back to 50 shares. Now I would wait until market open to get a better price; pre-market pricing for UNL is horrid and will gap up at market open as long as gas prices hold.

Fundamentally, I think prices are right were they should be. The market has decided on this range and it will stay in this sub $3 range until storage shrinks to at least match the 5 year average. Think of it this way, there is no need for demand concerns until there is some kind of storage threat. As long as there is plenty of gas in the ground and production is still relatively strong, buyers can be picky, keeping prices low. Weather will continue to steer pricing within the already set range.

Now, since I have sold a call. I can take my 20cent gain and get out by Friday, or I can roll the call forward. I could also roll the call higher, but I’m not sure prices will rise more, so that is not a path I want to take.

I entered the trade at $8.41/share. At $9.15, I sold a 9 strike call for 1/8/21 expiration for $0.35, limiting my max gain to $9.35. It also gives me a small buffer down to $9 and still collect the $0.35. for a $9.35 exit. Of course max gain.. meaning I can’t make any more than $9.35 on this trade. If I roll another week out, I can expect roughly another 10 cents in premium, clearing my original goal of $1 gain on the UNG trade.

I do believe the price could continue a bit higher this week. If that does end up happening, the spread between 1/8/21 and 1/15/21 expiration may shrink a little, but being that I’m holding 1/8/21 expiration, delta will be very strong at this point and I want to hang on to that more than I want to scrape in another “potential” 10 cents… For now.

I’m going to hang on to maximize my gain on UNG. If UNG starts moving back toward $9, I will dump the entire trade and reduce UNL back to 50 shares.

If UNG holds around $9.5 or higher, I’ll hold and consider rolling out to 1/15/21 for the next 9 strike call and go from there. I want to stay as close to expiration as possible in case I need to exit the trade.

Seems like I’ve rambled a bit… I’m moving between this and real work so it’s not so easy to keep my thoughts just right.

My plan:

  • Hold UNL and UNG right were they are for now
  • If prices rise, I will continue to hold UNG and maybe reduce UNL as it approaches $8/share
  • If UNG falls back below $9.2, dump it and reduce UNL back to 50 shares.

If prices seem weak, I want to dump and kinda press the reset button before my account goes back into the red. By reducing down to only holding 50 shares of UNL, I have much more freedom to wait and dial back up at any time. This is a good moment to protect. The market has established a range that will continue to be the case until storage swings from a surplus to a deficit. This has proven harder than first suspected. But it does every year. Every year the market (and myself) gets swept up in the idea of a strong draw season and prices spike. Then reality sets in and brings prices back to where they should be for the time being. Anyway, I think I’ve explained my thoughts in a round about way. Good Luck

Oldinvestor

Afternoon Thoughts – Covered call conversion

My positions as of afternoon trading (2PM eastern time) 12/31/2020

I’m still holding long UNG and UNL with 100 shares of each. My account balance has improved drastically. I made a spur of the moment decision to sell a call against my UNG position. I sold a 9 strike with expiration of 1/8/2021. I am selling a 9 vs a 9.5 call for the protection. I am well aware that it will limit my gains drastically, but will also protect my position as well. This call will expire in 8 days, so if gas bobbles any next week, I will scrape some profits from options premium. If gas continues to go up from here, I will make money with UNL and I’ve already locked in a substantial gain with UNG directly. Good Luck

I hope 2021 is better to all of us. Cheers

Oldinvestor

Morning Thoughts – Pile back on

LNG is the only thing keeping gas above $2 right now. Production is down, no doubt, but Res/Commercial demand and Power Burn Demand are down year over year just as much. If not for the strength in LNG demand, this ship would be sunk.

With that said, Asian pricing has shown there must be a great demand for LNG over seas… This should be a sign that exports will continue. European storage also continues to be in better shape surplus wise than the US. As in, Europe is using more of their gas storage.

I’ve mentioned I will be cutting back on posts, except when something arises. Something has arisen.. more opportunity.

I never did sell my last 100 shares of UNL.

My posistion as of pre-market 12/28/2020

I’m going to buy 100 shares of UNG here. That is roughly 33% of my account value. This move down is something of a liquidation. I think it’s a bit overdone. I will probably be wrong and Natgas prices may very well move closer to $2…. Nonetheless; I am a buyer.

New positions as of pre-market 12/28/2020

I’ll hold here and see what this week has in store.

OH!, and this move is mostly weather related. I accept and admit prices probably are not coming back quickly. Now to wait and see what happens next. Good luck

Oldinvestor

oh, and I had mentioned I would dump UNL on a move lower, but the market moved too quickly for me to respond. I will simply hang on from here. I may take a loss on UNL if UNG will swing me a profit soon. I cannot say for sure yet. Just waiting to see what the market does this week.

Morning Thoughts –

I’m not going to disappear, but I’m backing away from NGETF.com. I will still post updates, and I think about it every morning. I think I’m just getting tired of chasing my tail, and I’m finally giving in. I’m not equipped to offer good service so I should stop. I keep a lot going on all the time, and all too often I add too much to my plate.

So I’m going to go back to where I started… Simply sharing my trades for now. Maybe share a screenshot of my example account. Something like this

Example account as of pre-market 12/22/2020

As you can see, I’m still holding 100 shares of UNL. The market is trying to spur this morning. I half expect it to fall on its face. We shall see. I’ll continue to hold long.

IF YOU DO NOT SEE A POST:

It is because I haven’t seen/heard anything significant to share. I will post when I’m even considering making a change to my account. I might try some more covered calls. SLB ended ok. It could have been a much better trade, but it was was managed well enough. I just need to slow down a bit. Sorry that sounds shitty, I hope to always stay brutally honest with myself and everyone around me. The EIA report is expected tomorrow and everyone is expecting a big draw. This could be what has the market up this morning… that and an actual bullish weather forecast. I would be reducing UNG further this morning, had I not gotten stopped out. I’ll continue to hold UNL until there is a definite sign the market has turned to fall. There should be plenty of time to pass along the word. Good Luck

Oldinvestor

As a side note; I’m learning a bit about C programming and embedded systems to build something… hopefully automotive related. I have my eye on a module to add automatic headlights/auto dome light/ auto radio off to an older generation car/truck. It should cost less that $50 with everything included. I’ll include updates if I get anywhere. I’ll be following Microchips guide: https://microchipdeveloper.com/tls2101:start