This is a sample entry from Brian Cullen’s email newsletter, The Cullen Outlook, published on March 20, 2013.
May / August NATURAL GAS spread
Supply / Demand trade:
During the winter months we typically use up a lot of built-up supply as demand for natural gas is at its peak at this time of the year. With the heating season winding down, we will be turning our attention to the supply issues that may be facing the further out months. As distributors look to buy gas to refill diminished supplies, they generally will be looking to buy months later in the year.
I will be trading 2 spreads based on risk vs. reward levels
BUYING 2 of the AUGUST contract
SELLING 2 of the MAY contract
Premium of -85 to the BUY side …last trade -91
(we would like this to get MORE negative or WIDEN out)
Risk will be the -55 level …($600.00)
OBJ will be the -150 level …$1,300.00
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