I have basically given up trading stock and bond options for a while – between the Federal Reserve’s unprecedented rate cuts (with the stock market at record highs and unemployment at a generational low), and Donald Trump’s daily stock market Twitter pumps, there is nothing of value to buy. Apparently for now, we will continue to live in a bubble economy.
- The New York Times – Federal Reserve Cuts Interest Rates for Third Time in 2019
- MarketWatch – Trump perfectly orchestrates the stock market’s rise whenever momentum wanes
I am branching out and trading options on commodities – to keep myself awake, and generate a little income.
United States Natural Gas (UNG) is an ETF trading near a 52-week low – traders apparently are betting on a warm winter, and Natural Gas stock piles increasing into the Spring. Hard to predict the weather, but the lowest UNG has closed in the last twenty years is $17.56 – it was trading around $18.00 per share today – seems tailor made for a put sale.
Here is the Trade:
- Sold: Ten (10) December 20, 2019 Puts
- Strike Price: $17.50
- *Premium Collected: $500.00
Note: these options only have 14 days left until they expire – and I sold them going into a week end 😉
If I am forced to buy the 1000 shares, my entry price will be approx. $17.00 per share – well below the lowest price the shares have traded at for the last twenty years.
*Excludes transaction costs.
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