Natural Gas

I took on 2 plays on Nat Gas . Yesterday I bought 2000 shares of NGAS at $2.4 yesterday for an account I manage. Before the market closed I picked up 3 UNG calls for $2.7 for another account. It appears that the bottom that was put in at the end of April was not tested/violated and the higher low of 13.29 (some would say a double bottom) acted as new support. I'm betting that this trend will be confirmed and that natural gas moves up as other energies (i.e. oil and coal) become expensive and fulfill their potential. Either way I think nat gas is attractive long-term at these levels.

Been away... but a few new plays C & NGAS.

Been busing with closing escrow this week but managed to buy back my remaining 2 C calls at an even larger ROI about 56%. Today I initiated a new position of 2000 shares in Natural Gas with NGAS at $2.40. I'm attracted to this beaten down sector and have been stalking this stock for awhile now... look like's this could be potentially in a volatility squeeze right around the 20MA support. Another stock I'm looking to grab is EEE looks like another volatility squeeze play.

Sliver Play

Silver is down today, and I decided to make my play by selling 10 put contracts at eht $14 strike with Jul 09 expiry for $0.30 a contract. I do not plan to be exercised but if I do that would give me a purchase price of $13.70 per share and from there I would revert to a covered call strategy. As I discussed in the ealier post about silver, I do not see a lot of downside on this play and feel really confident that Silver will not go to zero.

I also sold another 10 short contracts at the same strike price but with Jan 10 expiration for $1.30. My plan is to buy this back at about a $1.

The Metal's (Intrinsic Value is > Zero)...Right?

Friday Jason and I met up and got lunch. On the way back to my office we started talking about a position that he has on the silver ETF. If I remember correctly he sold the $8 Puts and bought the $15/$30 bull call spread. Jason Correct me if I am wrong. But anyways the discussion started out with Silvers performance as of late. It has been outperforming gold for sometime now and seems to be the metal of choice for protection against the all mighty inflation. One point that Jason and I discussed was that what the worst case scenario could be with this position. Theoretically Silver could go to zero and he would lose what ever he paid for the call spread and be exercised on his contracts to buy silver at $8. But lets look at this play a little more realistically. It is very unlikely that Silver will ever go to zero because as Jason pointed out "it has intrinsic value" So even if he lost out on the call spread and go executed on the puts he could eventually sell enough calls against his position to break even. I guess what I am trying to say is that I like the risk/reward on this play. As I see hyper inflation a few years down the road, I think that commodities will outperform stocks by a long shot. But one thing put Silver on my radar more than anything and that was the fact that Jason stated on Friday, "That compared to gold Silver has many more practical applications". One example he pointed too was how Silver is a super conductor of electricity and how vital a role it will play in the development of the "Smart Grid". Anyways, thanks Jason for opening this opportunity up to me. I will look to put on a position in Silver, I am just not sure what yet.