Scott Nations Suggests An Options Strategy In United States Natural Gas Fund (UNG)

Scott Nations said on

that natural gas is a very volatile commodity, and March to June time frame is not an exception, just because it is getting warmer. He explained United States Natural Gas Fund, LP

, the natural gas ETF, has had an average move of 16% in March to June period. Mr. Nations is not sure if UNG will trade higher or lower. There are speculations about slowing growth of the U.S. economy, and on the other side traders are speculating about an increase in demand for natural gas as we shut nuclear plants for inspection. Since he is expecting a big move, but he doesn't know in which direction, he wants to buy a strangle. Specifically, Scott Nations wants to buy the July 12 call in United States Natural Gas Fund, LP (

) for $0.60, and he also wants to buy the July 10 put for $0.40. This trading strategy would cost him a dollar, and his break even on the downside is $9. On the upside his break even is $13. United States Natural Gas Fund, LP (

) gained 4.15% on Friday, and it closed at $11.80.