In this week's newsletter I suggested a long term and ongoing buying strategy for natural gas. In 2009 we saw a trade to 240, a rebound to over 600 and we are currently pressing 300. Prior to the 2009 drop the last time natural gas was this low was in 2002. Despite decent supplies there comes a time when prices are a value as we approach cost of production levels. Also, modern technology already shows that we can subsitute natural gas for other fuel sources in many cases. As recently as January 2010 crude oil was still trading at $32.70. Where is it now and the psychology certainly changed there in a short time, wouldn't you say? (See charts for crude and gas below) We will soon be taking advantage of natural gas and it's many cleaner useages in this country. I am offering two strategies below. The mini future has a valuation of $25 per cent. 3.05 - 3.06 and $2500 per dollar. 3.05 - 4.05 and the margin for the minin is $850. A full size is available where each cent is $100 and each dollar is $10,000 and the margin is $3400.
The Trade: Buy a mini March Natural Gas at Market (3.07 last)
The Stop: Place a sell stop at 2.74 or riskier traders buy and hold .33 = $825 to the stop
Objective: Short term 3.75 and longer term over 5.00
Monthly Natural gas