We’ve seen stocks consolidating around SPX 4000.
Continuing today as markets try to digest Consumer Confidence coming in higher than expected.
But in commodities, yesterday saw Oil squeeze, & Gold suffer from profit-taking
We’ve got our eyes on a diff commodity w/bearish divergence ☟
➠ NAT GAS UPDATE
σ Recently, nat gas hit new lows due to higher production and less demand from warmer weather.
The fundamentals don’t look great, but the price has collapsed and is showing #bullishdivergence.
Suggesting downside exhaustion.
σ So, we believe a bounce is due in UNG.
But we need to think carefully about how to structure a bullish trade as NatGas is the highest vol commodity on our dashboard.
So we’ll look for ways to structure a bullish trade that takes advantage of the #volatility surface while not getting too damaged if our views are wrong on the bounce.
σ Our Volatility Dashboard for UNG is signaling selling puts or put spreads as the optimal play.
Due to the elevated volatility, positive carry, and high skew.
But, we want to add a bit more delta exposure and plan to do so by buying a #call ratio.
σ As always, we’ll monitor the situation closely and adjust our strategy as needed…
➠ Watch the clip below from today’s Macro Options Spotlight for more colour on what we are seeing in Natural Gas
➠ Watch the rest of the Spotlight to also see:
• Recap of recent price action
• Today’s Cross Asset Vol Summary
• Our thoughts on the bearish positioning shift amidst low consumer expectations
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Thank you for making it this far!