NaughtyPines

UNG -- RANGEBOUND/NO VOLATILITY, IDEAL FOR SHORT STRADDLE

AMEX:UNG   UNITED STATES NATURAL GAS FUND
UNG             has been locked in a fairly tight range since February between 15.32 and 12.27. Virtually devoid of volatility and unworkable due to the price of the underlying using an iron condor or short strangle (both of which are best used in high volatility environments), it may be perfect for another option strategy that assumes that price will remain in a particular range for the duration of the option setup: the short straddle, which consists of a short call option and a short put option at the same strike price.

EXAMPLE:

Sep 11 13.5/13.5 short straddle.
POP% -- 50%
Max Profit/Loss: $126/unlimited per contract
BE's at 12.24/14.76

Notes: I've chosen the Sep 11 weekly for this example due to strike prices at .50 increments, which allow me to place the strikes a little more cleanly at or very near current price.

Since short straddles have higher profit potential, I look to take these off at 25% max profit ... .
NaughtyPines
a year ago
Did not get filled on 8/5. Will retry on 8/6 for a $1.23 credit.
Reply
NaughtyPines
a year ago
Did not get filled on 8/6 either ... . May have a go at it when I have the time to monitor the trade during the NY session and modify the credit sought.
Reply
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