https://www.bloomberg.com/news/articles/2022-04-01/trader-makes-lottery-ticket-bet-on-u-s-natural-gas-above-10
By Gerson Freitas Jr April 1, 2022, 11:24 AM PDT
>>>” A trader is making a big bet on the odds of U.S. natural gas futures doubling by summer.
The trader bought an unusually big chunk of 31,382 options contracts on Thursday that would give them the right to buy gas at $10 per million British thermal units by the end of July. As part of the trade, it sold a similar-sized package of $10.50 calls that will expire on the same day, according to block trade data compiled by Bloomberg.
The transaction cost less than 2 cents per mmbtu of gas — which corresponds to the price difference between the $10 calls and the $10.50 calls — and totaled more than $5 million. The trader would benefit most from a rally to $10.50 before the options expire on July 26, allowing to it to make 50 cents per mmbtu, or more than $150 million minus the premium paid for doing the trade.
Natural gas futures surged more than 50% in the first quarter, a record for the period, due to concerns about tight inventories for the heating and power-plant fuel amid booming export demand. Still, a surge to $10 by summer is seen as unlikely. The commodity traded in New York at about $5.70 on Friday and should average $3.70 in the third quarter, according to analyst forecasts compiled by Bloomberg. “<<<
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MY TAKE:
I find this massive trade as supportive market action… And because of the massive size, it was most likely put on by a very sophisticated professional, who probably sees some of the same things I do, as I explained in my post on this site on April 2 : https://www.reddit.com/r/Commodities/comments/tum39q/us_natural_gas_storage_trending_to_dangerous/?sort=newbased on an article that I published on March 21, 2022 in Medium.
A) I absolutely LOVE IT that the ANALyst consensus is that NG should be $3.70 in Q3 this year= Wall st is absolutely CLUELESS as to what is actually happening to cause NG to be at $6 in early April….
B) I always want my investments/trades to start when most of Wall St. is absolutely clueless as to what I am forecasting…. Additionally, I LOVE it when most of Wall St. is actually taking the other side of my trade/investment, at the start.
C) WHY? Because then I know that I am NOT late in the process of investing….. I want to GET IN RELATIVELY EARLY, which helps maximize the upside and minimize the downside…. Most investors LOSE by being late, when the risk/reward is much less attractive.
D) But, I do NOT have to get in at the very bottom… I find it better to WAIT until the LONG TERM UPTREND is ESTABLISHED…. but, most of Wall St. is still clueless for various reasons.
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DID YOU SEE that U.S. NAT GAS CLOSED OVER $6 TODAY, April 5, 2022 ????
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The LAST time that NG was this high in early April was back in 2008…which was at the TAIL END of a period from late 2004 to June 2008, when the AVERAGE ANNUAL PRICE was about $8….
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A period of time when SJT traded up to the $$$ HIGH FORTIES
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I SEE a very similar situation unfolding NOW! ……= Better buckle your seat belts and get ready for a G-FORCE BLAST OFF …. because NG is going to the moon and that means so will SJT distributions and share price.
