why not cover the downside and buy the $5 put for .06 ticks.
or...pay .08 for the feb 6.5 p. I was a an options market
maker on the floor of the COMEX and NYBOT for many years and have
seen crazier things happen. LOL. Plus, you free up capital
and can do more!
One word about UNG - like USO, these assets are subject to
"decay" in the sense that they are ETFs that maintain futures
positions and as such are continually forced to roll each both.
Therefore, they are constantly buy more expensive contracts and
selling out cheaper ones. Has to do with contracts being in
contango vs backwardation (This is my understanding of it at
least. Please feel free to elaborate/correct!)
Posted by DigiNomad on 1st of Feb 2023 at 01:51 pm
pep8261 - I normally would cover the downside. But sometimes I
will sell naked puts and calls (sell strangles, or just one side)
1. because it's the lazy way to get in 2. maybe most importantly -
I'm not trading this name in size and 3. because it is typically
much easier to defend a naked option if a strike gets challenged.
For example, if UNG opens at 8 tomorrow, I would roll my naked puts
down and out, most likely to the April expiry, 7 strike, to allow
more time to be right and generate additional credit. Thoughts?
Because I started this trade so small, another option for
defense, if necessary, would be to roll down in the same month and
potentially double the number of contracts (whatever it takes to
generate an equal amount of premium). This works well with SPX, but
I'm not sure about UNG with the dollar wide strikes on an 8 dollar
ish ticker.
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why not cover the downside
Speaking of Natural Gas ... it can be a king ...
Posted by pep8261 on 1st of Feb 2023 at 01:24 pm
why not cover the downside and buy the $5 put for .06 ticks. or...pay .08 for the feb 6.5 p. I was a an options market maker on the floor of the COMEX and NYBOT for many years and have seen crazier things happen. LOL. Plus, you free up capital and can do more!
One word about UNG - like USO, these assets are subject to "decay" in the sense that they are ETFs that maintain futures positions and as such are continually forced to roll each both. Therefore, they are constantly buy more expensive contracts and selling out cheaper ones. Has to do with contracts being in contango vs backwardation (This is my understanding of it at least. Please feel free to elaborate/correct!)
https://seekingalpha.com/article/4254908-uso-and-ung-worst-etfs-in-world
seekingalpha.com
USO And UNG: The Worst ETFs In The World (NYSEARCA:UNG) | Seeking Alpha
The United States Oil Fund ETF and the United States Natural Gas Fund ETF were among the hottest products on Wall Street when they were started in the mid-2000s.
pep8261 - I normally would
Posted by DigiNomad on 1st of Feb 2023 at 01:51 pm
pep8261 - I normally would cover the downside. But sometimes I will sell naked puts and calls (sell strangles, or just one side) 1. because it's the lazy way to get in 2. maybe most importantly - I'm not trading this name in size and 3. because it is typically much easier to defend a naked option if a strike gets challenged. For example, if UNG opens at 8 tomorrow, I would roll my naked puts down and out, most likely to the April expiry, 7 strike, to allow more time to be right and generate additional credit. Thoughts?
Because I started this trade so small, another option for defense, if necessary, would be to roll down in the same month and potentially double the number of contracts (whatever it takes to generate an equal amount of premium). This works well with SPX, but I'm not sure about UNG with the dollar wide strikes on an 8 dollar ish ticker.