Chart of the Day: Natural Gas Futures
Shown above is the current 1 year chart of front month natural gas futures. After bouncing just below the 4 level many times, natural gas rebounded all the way to above 5, before plummeting to new yearly lows at the 3.65 level. However, since then it has ground higher in a slightly higher highs, higher lows rally as shown by the channel.
We believe natural gas will continue this jagged rally, as economic conditions in the US slowly improve and energy demand picks up. Additionally, cold weather provided by the coming winter should serve to increase demand.
We recommend selling put options on natural gas for the 3.45 level and below for November expiration. The 3.45 put options can be sold for $.040, or $400 per contract.