Wednesday, September 16, 2009

UNG Almost Back to Par

UNG is now trading only at a 3.5% premium. This means it can be traded without the same fear or buying/selling premium. Also it has become CRAZY volatile. Today nat gas was up 10+% while UNG was up 5.8%, making the gap shrink. The question I am waiting to answer is whether nat gas has been extra volatile recently because of this arbitrage opportunity, or if this crazy action will continue. I managed to bank some nice $ going long UNG today, and hopefully will do the same in the future.

There still is a premium in UNG and 3% is still a BIG premium for an "efficient" ETF, so be careful not to hold long term.