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Natural Gas Options Trading

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http://www.Options-Trading-Education.com - Natural Gas Options Trading - A brief rally in natural gas options trading was snuffed out recently. High levels of natural gas production have driven prices …

http://www.Options-Trading-Education.com - Natural Gas Options Trading - A brief rally in natural gas options trading was snuffed out recently. High levels of natural gas production have driven prices down. It has been an unusually mild winter in North America and a number of natural gas suppliers have announced reductions in production. The prospect of reduced supply has encouraged commodity options traders to buy calls on natural gas futures. The prospect of reduced demand encourages traders to purchase puts. Although companies such as ConocoPhillips are reducing output, Exxon Mobile is not. The United States Department of Energy data indicates historically high levels of production. New technology allows for extraction of natural gas from shale formations in previously tapped out areas of the Northeastern USA and along the Gulf Coast. Prices of puts and calls in natural gas options trading also hinge on economic forecasts and if the ever so slow US economic recovery gets into high gear, demand could rise followed by natural gas prices. As with all commodity futures options trading, accurate appraisals of both supply and demand are crucial to profits.
Because energy products are produced and trade throughout the world issues such as the most recent aspect of the Arab Spring, the uprising in Syria, have a bearing on prices. Likewise, the painfully slow resolution of the Greek debt crisis is dragging down expectations of any early economic recovery on the continent. Further unrest in the Middle East could spread throughout oil and gas producing regions, driving down production and driving up prices. A prolonged recession in Europe will drive down demand and natural gas prices as well. The long term view in natural gas options trading has been that production is up and demand is down and that it will not change soon. Natural gas futures have fallen to just over eighty percent of their previous values in just the last month. US DOE reports show that Alaskan production is up almost fifteen percent to record production levels. There are estimates of natural gas prices falling substantially farther in 2012. If this turns out to be the case, when to buy puts on natural gas may be now. On the other hand producers could scale back, the Middle East could settle down, and Europe could fix its debt dilemma.
The advantage of natural gas options trading on futures instead of trading futures directly is twofold. First of all an options trader limits his risk by buying puts or calls on a commodity or stock. The most he stands to lose is the price of the options contract, even if futures prices move unexpectedly and dramatically opposite to what he expects. Second, in natural gas options trading, the trader is using less money than would be required to satisfy the purchase of a futures contract. Nevertheless the movement in futures price will be the same in buying or selling futures directly or in natural gas options trading on futures.


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  • 1. A BRIEF RALLY IN NATURAL GAS OPTIONSTRADING WAS SNUFFED OUT RECENTLY. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 2. HIGH LEVELS OF NATURAL GASPRODUCTION HAVE DRIVEN PRICES DOWN. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 3. IT HAS BEEN AN UNUSUALLY MILD WINTERIN NORTH AMERICA AND A NUMBER OFNATURAL GAS SUPPLIERS HAVEANNOUNCED REDUCTIONS INPRODUCTION. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 4. THE PROSPECT OF REDUCED SUPPLY HASENCOURAGED COMMODITY OPTIONSTRADERS TO BUY CALLS ON NATURAL GASFUTURES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 5. THE PROSPECT OF REDUCED DEMANDENCOURAGES TRADERS TO PURCHASEPUTS. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 6. ALTHOUGH COMPANIES SUCH ASCONOCOPHILLIPS ARE REDUCING OUTPUT,EXXON MOBILE IS NOT. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 7. THE UNITED STATES DEPARTMENT OFENERGY DATA INDICATES HISTORICALLYHIGH LEVELS OF PRODUCTION. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 8. THE UNITED STATES DEPARTMENT OFENERGY DATA INDICATES HISTORICALLYHIGH LEVELS OF PRODUCTION. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 9. NEW TECHNOLOGY ALLOWS FOREXTRACTION OF NATURAL GAS FROMSHALE FORMATIONS IN PREVIOUSLYTAPPED OUT AREAS OF THENORTHEASTERN USA AND ALONG THEGULF COAST. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 10. PRICES OF PUTS AND CALLS IN NATURALGAS OPTIONS TRADING ALSO HINGE ONECONOMIC FORECASTS AND IF THE EVERSO SLOW US ECONOMIC RECOVERY GETSINTO HIGH GEAR, DEMAND COULD RISEFOLLOWED BY NATURAL GAS PRICES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 11. AS WITH ALL COMMODITY FUTURESOPTIONS TRADING, ACCURATEAPPRAISALS OF BOTH SUPPLY ANDDEMAND ARE CRUCIAL TO PROFITS. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 12. BECAUSE ENERGY PRODUCTS AREPRODUCED AND TRADE THROUGHOUT THEWORLD ISSUES SUCH AS THE MOSTRECENT ASPECT OF THE ARAB SPRING,THE UPRISING IN SYRIA, HAVE A BEARINGON PRICES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 13. LIKEWISE, THE PAINFULLY SLOWRESOLUTION OF THE GREEK DEBT CRISISIS DRAGGING DOWN EXPECTATIONS OFANY EARLY ECONOMIC RECOVERY ON THECONTINENT. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 14. FURTHER UNREST IN THE MIDDLE EASTCOULD SPREAD THROUGHOUT OIL ANDGAS PRODUCING REGIONS, DRIVINGDOWN PRODUCTION AND DRIVING UPPRICES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 15. A PROLONGED RECESSION IN EUROPEWILL DRIVE DOWN DEMAND ANDNATURAL GAS PRICES AS WELL. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 16. THE LONG TERM VIEW IN NATURAL GASOPTIONS TRADING HAS BEEN THATPRODUCTION IS UP AND DEMAND ISDOWN AND THAT IT WILL NOT CHANGESOON. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 17. NATURAL GAS FUTURES HAVE FALLEN TOJUST OVER EIGHTY PERCENT OF THEIRPREVIOUS VALUES IN JUST THE LASTMONTH. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 18. US DOE REPORTS SHOW THAT ALASKANPRODUCTION IS UP ALMOST FIFTEENPERCENT TO RECORD PRODUCTIONLEVELS. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 19. THERE ARE ESTIMATES OF NATURAL GASPRICES FALLING SUBSTANTIALLY FARTHERIN 2012. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 20. IF THIS TURNS OUT TO BE THE CASE, WHENTO BUY PUTS ON NATURAL GAS MAY BENOW. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 21. ON THE OTHER HAND PRODUCERS COULDSCALE BACK, THE MIDDLE EAST COULDSETTLE DOWN, AND EUROPE COULD FIXITS DEBT DILEMMA. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 22. THE ADVANTAGE OF NATURAL GASOPTIONS TRADING ON FUTURES INSTEADOF TRADING FUTURES DIRECTLY ISTWOFOLD. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 23. FIRST OF ALL AN OPTIONS TRADER LIMITSHIS RISK BY BUYING PUTS OR CALLS ON ACOMMODITY OR STOCK. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 24. FIRST OF ALL AN OPTIONS TRADER LIMITSHIS RISK BY BUYING PUTS OR CALLS ON ACOMMODITY OR STOCK. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 25. SECOND, IN NATURAL GAS OPTIONSTRADING, THE TRADER IS USING LESSMONEY THAN WOULD BE REQUIRED TOSATISFY THE PURCHASE OF A FUTURESCONTRACT. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 26. NEVERTHELESS THE MOVEMENT INFUTURES PRICE WILL BE THE SAME INBUYING OR SELLING FUTURES DIRECTLYOR IN NATURAL GAS OPTIONS TRADING ONFUTURES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 27. THE RETURN ON INVESTMENT ON ANACCURATELY ANTICIPATED MOVEMENT INNATURAL GAS FUTURES WILL BE GREATERWITH OPTIONS TRADING THAN WITHDIRECTLY BUYING OR SELLING FUTURES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 28. THE RETURN ON INVESTMENT ON ANACCURATELY ANTICIPATED MOVEMENT INNATURAL GAS FUTURES WILL BE GREATERWITH OPTIONS TRADING THAN WITHDIRECTLY BUYING OR SELLING FUTURES. W W W. O P T I O N S - T R A D I N G - E D U C AT I O N . C O M
  • 29. FOR MORE INSIGHTS AND USEFULINFORMATION REGARDING OPTIONS ANDOPTIONS TRADING, VISIT WWW.OPTIONS-TRADING-EDUCATION.COM.