Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Can someone explain how to interpret the
a) Nat Gas Curve
b) Calendar spreads
to try to see what effect there might be on the front month futures
alternatively.. is there a good comprehensive book that discusses this and calendar/flys in Nat Gas..
Side note: Do prop firms trade the exchange traded flys? or do they make synthetic flys out of Calendars? and is there any material that discusses how to look for anomalies for a mean reversion trade?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,060 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,229
Sorry @jokertrader but I don't have the time to answer this with the time it deserves. If you search on the site though you will find I have answered similar questions several times.
We consume use less NG in the summer than we produce, and use more in the winter than we produce. Hence we store massive amounts of gas for half a year. As such one of the key things the NG forward curve shows is the ecomomics of storage (K vs F) and the expectation of us having enough gas to get through the winter (H vs J). Hedge Hogs: The Cowboy Traders Behind Wall Street's Largest Hedge Fund Disaster
Front month is heavily effected by short term fundamentals, while the forward curve is more effected by long term fundamentals. When looking at the forward curve I find it helpful to look at calendar spreads rather than outright prices. See some of my crude posts in the crude thread.
Flys are traded a lot more in non-seasonal products than seasonal ones. CME does list exchange traded flys for NG, but not many of them and they dont trade much. In my experience the exchange traded flys in both NG and CL are less effective than trading the synthetic's. ie a good spreader will get you filled before the exchange traded one's do. (but good spreaders aren't free!)
What is going on with NG?
Anyone selling Calls yet or wait till mid June. What to look for? rather than getting analysis paralysis.
I am trying to figure out this commodity, among others any pointers?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals, U308 and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,060 since Dec 2013
Thanks Given: 4,410
Thanks Received: 10,229
LNG exports are growing, and swinging the supply/demand imbalance back the other way. Despite a warm winter, we enter the injection period with stocks significantly below last year, and a lot closer to the 5 year average.
In the Natural Gas market there is a product called Basis. Basis is the differential between a specific location in the country and the delivery location for futures in Louisiana. Right now with the exception of Boston (Algonquin) and San Francisco (PG&E), basis for all other non-Gulf Coast locations is negative. ie Natural Gas across America is worth less than it is down in Louisiana. This is in stark contrast to history, where basis for most of the country was higher than the Gulf Coast representing the cost to transport gas away from the producing area's (TX, LA etc) to the market area's (Midwest, Northeast etc.). What changed in the last several years? Well obviously Shale Gas brought on a lot of supply, and supply that is in many cases closer to the market than TX & LA, but also LNG exports. A lot of that gas that used to flow up pipelines to the NE, now is exported.