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For: Monday 05-17-2010

Natural Gas

The natural gas market is finally showing some signs of life. There may be a bottom in here somewhere. As you see on the charts below the market has been in a sideways trading range since mid March. Looking at the merged profile chart we see good support near the middle of the range just above 430. We will look to buy call spreads on a breakout risking to below support.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On a close above 4.560 versus the July futures, buy the July 500-540 call spread for a debit of 60 ticks on a limit. Risk the premium paid or a close back below 4300 whichever comes first. (>$600 not including commissions and fees), Look to take profits if the market trades to 5.050.