Cold weather opening up options opportunities


The first item I notice and the most important item that I believe is that we are at the highest price in natural gas in almost four years! What that has caused on this monthly natural gas chart below is a "break-out" of the trading range that started in about August of 2010. More importantly to me though, is that it is a "break-out" to the upside. The reason I call this a "break-out" to the upside is because the market has closed above the top line of the Bollinger Bands (light blue shaded area).



Since, I am now bullish on this market, there could be several ways to play it with options. You could buy straight call options or bull call spreads in a 3-to-1 ratio with a put for a hedge or "insurance" in case the trend changes on a dime and the market falls. Another potential play would be to sell naked options or option spreads — again with protection maybe in the form of a futures contract or with other option plays. Remember, when you sell naked options you have unlimited risk and should have a "well-funded" account of risk capital. 

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About the Author
Matt McKinney

Matt McKinney is a full-service options broker at Zaner Group both buying and selling energies, metals, grains, softs, currencies and the 30-year bond market. My strategies include time frames of 45-120 days with the ability to liquidate at any time. I can be reached at

Whether you're a novice trader who wants to participate in options on futures or an experienced trader, you can also check out my blog at

Futures and options trading involves substantial risk and is not for everyone.

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