Just How Bad Has This Natural Gas ETF Been?

Natural gas could be in focus this week

Managing Editor
Oct 17, 2022 at 11:18 AM
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At the six month mark of 2022, ProShares Ultra Bloomberg Natural Gas ETF (BOIL) was cruising, trading at a year-over-year high of $140.50 on June 8. Fast forward to the fall months, and BOIL's technical script has completely flipped. 

BOIL is fresh off its eighth-straight weekly loss and could be headed for number nine; last seen down 10% to trade at $44.10 this morning.  As gas prices slowly cooled in the summer months, the ETF pivoted sharply from its highs, trading as low as $38.71 on June 30. Nevertheless, BOIL remains up over 70% year-to-date, and well off its Dec. 30 annual lows of $23.68.  

The energy crisis in Europe has instigated much of the natural gas volatility seen in the last six months. Later this week, European Union (EU) will be meeting to decide on gas price caps. The issue has created an impasse for weeks, and a resolution could give BOIL a short-term bounce. 

Options traders continue to target calls. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly three BOIL calls for every put in the past two weeks. Looking further out, the ETF's 50-day call/put volume ratio of 2.82 is in the elevated 80th percentile of its annual range, meaning buyers have rarely shown a greater appetite for bullish bets over bearish during the past year.

Options could be an ideal way to speculate on the ETF's next move. This is according to the equity's Schaeffer's Volatility Scorecard (SVS) of 86 out of 100, which indicates the stock tends to realize bigger returns than options traders have priced in during the past 12 months.


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