Natural Gas setup

OptionsGeek — Wed, 16 Dec 2009 14:39:59 +0000

Based on fundamental and technical factors, Natural Gas looks well setup for call option selling. For those of you who’ve never traded Natural Gas options before, there can be some volatility (which is of course a good thing in many cases from a premium collection perspective). A couple of approaches you can use to mitigate this volatility, would be to use credit spreads, or “calendar credit spreads” (covering the short call with a purchase of the same strike in an earlier month). I’m looking at April options, well out of the money. Thanks to recent volatility, good premiums are available at strikes that are almost double the current price of Natural Gas.

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Natural Gas setup