Sold 60c@$250 and closed on the same day for $200. Nothing much to see here..
- With a longer term trade with around 45 days to go, getting 20% of premium value within a day enticed me to close early and free up margin for more trades.
Sold 52C@$310 and closed the next day at $270. Sold 52C@$210 and closed the next day at $170. Strangled at 55c@$70/42p@$50.
- I cant remember why i closed those 52c trades so fast, but it could be due to a lack of confidence during that period of time.
- Strangle mostly based on selling low delta options
Did a short term 49c@$40/40.5p@$50 strangle.
- Placing trades near price areas where a reversal had occured. I would definitely prefer to place the trades right on top or behind the reversal regions but the premiums collected would have been really low.
Sold the 49c/38p strangle at $170 per strangle. 45p@ $70 for a shorter term trade too.
- the 38p part of the strangle was put behind regions of price reversal. the 49c however was mostly based on selling low delta/far out of the money.
- 45p trade was a very short term trade betting that prices would be up for the next few days as price had breached previous support levels. I cant remember if there was positive news fuelling the rally too.
Sold 3.15C@$330 and a couple more@$350 a few weeks later. Closed the 3.15c positions on the 2nd of August at around $115 a pop. I felt that for the short period of 3 trading days, extracting 67% of value from my positions seemed like a good deal and reason enough to close early. Also, short term sale of the 2.8p@$180.
Basis of trade:
- Natural gas prices were suggested to head into a downward trajectory from July to mid October according to seasonal charts. Selling above the long term resistance of $2.95 provided extra margin for error.
- Short term sale of $2.8 puts were risky and based off a near term support point of $2.8. True enough, prices hit $2.796 and bounced back up a few minutes later.
This was my first ever option selling trade.
Sold the 3.00 Calls@ $270 a couple days after natural gas experienced a pullback from the recent rally.and 2.55 puts@ $210 shortly after to convert my position into a strangle. Added a second layer of strangle at $2.80C@$220/ $2.65P@ 60$ after that and got out of the $2.80 sold calls as i got spooked. I realised that price action nearly breached my other side of the strangle in the coming days too. Definitely a lesson learnt not to play too close to the fire here…
Here is the basis of my trade. I reckoned that:
- $3 was a psychological barrier for further advance and the steep rally from $1.99 meant that the market had to take a breather and then decide on which direction to go. In addition, prices breached long term resistance line of $2.95. However, prices fell back steeply the day after.
- EIA (The U.S energy information administration) estimates did not put NG from breaching the $3 price mark for the next few months.
- The rally was the consequential aftermath of a gentle winter, which drove prices down. With a large NG supply glut still looming ahead, i felt that it was not a strong enough basis for a sustained rally.
- Seasonal charts suggested that natural gas prices experience a decline from July to Mid oct. The image below is taken from The Moore Research Center , Inc.