I can attest to the cold weather recently moving to Chicago …coldest winter in decades. Like trading it’s all about timing, and my timing on this move coming from Miami, FL NOT Miami, OH was brutal. For the third ?session in a row an impressive acceleration higher with natural gas prices gaining 13% within that time frame. Futures are currently trading at their highest levels since June 11′. We are within spitting distance of $5 so expect that level to be tested in my opinion. As opposed to jumping in front of this freight rain I think it may make sense to trade a spread as opposed to an outright bearish options or futures play.?
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Below you will see two charts the?first?is a chart of March futures and the second is a spread chart; long June NG futures and short March NG futures 1:1. While?picking?a top is?dangerous?my?suggestion?is to wade?into?this?trade.?On the way up trading a?spread?your long May leg should ease the pain and ?if/when?we?get a ?correction I would expect?March?to outpace June on the way down just as it did on the way up.?
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Currently this spread is trading at roughly 35 cent premium to March. I drew two horizontal red lines… use them as your risk parameter ?and profit objective. ?Assuming one gets filled around current trade that would represent approximately $400 risk per strategy and a profit objective of $2700 per.?
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Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (?Forex?) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.
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