UNG Options Traders Target Technical Resistance

Oil prices surged today, while gasoline futures retreated

Sep 5, 2017 at 3:05 PM
facebook X logo linkedin

October-dated crude futures surged 2.9% today to settle at $48.66 per barrel, as key U.S. refineries come back online in the wake of Hurricane Harvey. Gasoline futures, on the other hand, plunged 2.8% to $1.70 per gallon after skimming two-year-high territory last week, with some speculating Hurricane Irma could lower demand for gas. Natural gas prices are also on the decline amid forecasts for milder temperatures, with the United States Natural Gas Fund LP (UNG) trading down 2.8% at $6.60. And while UNG call volume is running at an accelerated clip today, not all options traders are betting on a quick bounce.

By the numbers, 26,301 calls have changed hands on UNG so far -- 1.9 times what's typically seen at this point in the day, and volume pacing for the 94th annual percentile. As a point of comparison, just 3,895 puts have traded, about half of the fund's average daily put volume. 

UNG's weekly 10/13 7-strike call is most active, with 7,341 contracts on the tape. The bulk of this activity occurred when a 5,209-contract block was likely sold to open for an initial net credit of $57,299 (number of contracts * $0.11 premium collected * 100 shares per contract). The call writer can pocket this as the maximum potential reward, should UNG stay south of $7 through expiration at the close on Friday, Oct. 13. Risk, meanwhile, is quite substantial on a breakout above the strike price.

Widening the scope, the 7 strike has been popular among UNG options traders. While the October 7 call is home to peak open interest of 51,736 contracts, the September 7 call carries substantial open interest of 14,536. Data from the major options exchanges confirms a mix of buy- and sell-to-open activity at each strike in recent months.

Currently, $7 is home to UNG's 120-day moving average -- a trendline that contained a mid-May rally in the shares. Plus, this level, which coincides with the fund's 2015 lows, has served as a ceiling for UNG since June. And while the shares just wrapped up their historically weakest trading month of the year with a rare 6.2% gain, they tend to struggle in September and October. According to data from Schaeffer's Quantitative Analyst Chris Prybal, UNG has averaged a 0.3% loss in September since its inception, and a 4.7% decline in October.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI