Monday, November 1, 2010

Natural Gas Disasters: UNG Rollovers or Futures Rollovers?

Note: For updated straddles ad options on UNG, please see today's post.

UNG collapsed, once again. Actually, it was natural gas December futures that collapsed, the dreadful UNG just followed suit.

Are these collapses due to UNG rollovers? The latest rollover, spread over 4 days, was on October 14. From ETF Report, we see all the 2011 UNG rollovers by the way. Since UNG tardes such hugeb volunes, it can certainly affect prices. However, today, this had little to do with today's collapse.

However, take a look at the futures expirations.

November's futures ceased trading October 27. We had  a big run-up, then two trading days later, a real drop.

December's futures will cease trading November 24. This will be interesting.

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