Wt Nat Gas 2x Discussion Threads

[stewart3268] 24/8/2009 10:47

Same here, looks a good punt to me, at this price

[babylon3] 24/8/2009 10:37

Well I took a modest position this morning.

[cagey76] 24/8/2009 09:01

having read the stories about the hedge funds gambling on higher natural gas prices, I'm tempted to have a little nibble. I think this etf looks like a fairly reasonable was to gear up on the stake.



This ETFs price follows the DJ-UBS Natural Gas Sub-IndexSM price. Will that price naturally follow the Natural Gas price ?

[thecleaner2] 23/8/2009 23:46

Leveraged ETFs
A leveraged exchange-traded fund, or simply leveraged ETF, is a special type of ETF that attempts to achieve returns that are more sensitive to market movements than a non-leveraged ETF.[25] Leveraged index ETFs are often marketed as bull or bear funds. A leveraged bull ETF fund might for example attempt to achieve daily returns that are 2x or 3x more pronounced than the Dow Jones Industrial Average or the S&P 500 negating the need to apply margin. A leveraged inverse bear ETF fund on the other hand may attempt to achieve returns that are -2x or -3x the daily index return, meaning that it will gain double or triple the loss of the market negating the need to apply marging and sell short at the same time. Applying margin to a 2x Performance ETF would result in being leveraged on a position by 400%. Likewise on a 3x Performance ETF, that amount would increase to 600%. Leveraged ETFs require the use of financial engineering techniques, including the use of equity swaps, derivatives and rebalancing to achieve the desired return.[26]. The most common way to construct leveraged ETFs is by trading future contracts.

The rebalancing of leveraged ETFs may have considerable costs when markets are volatile. [27][28] The problem is that the fund manager incurs trading losses because he needs to buy when the index goes up and sell when the index goes down in order to maintain a fixed leverage ratio. A 2.5% daily change in the index will for example reduce value of a -2x bear fund by about 0.18% per day, which means that about a third of the fund may be wasted in trading losses within a year(0.9982^252=0.63). Investors may however circumvent this problem by buying futures directly, accepting a varying leverage ratio.[29]

[thecleaner2] 23/8/2009 23:15

am i right in thinking this is about supply and demand of gas in the us, the higher the demand the higher the price, the lower the demand the higher the reserves become and so pushing down the gas and stock price. I see these were trading in july 2008 at 80p when gas prices were high and now at 1.66p when prices are at all time low, so now would surley be the time to buy. how much lower can they go?

[bedwetter82] 22/8/2009 10:34

what are the risks involved trading this stock, still quite new to this game and would like some advice please.

[pbracken] 21/8/2009 11:21

Can someone provide the equation which would help me calculate the price of this stock IF gas hits 220-230 cents BTU? Thanks in advance.

[bottompicker] 21/8/2009 10:05

Billion, and yes, it was an increase of 52B (but in gas terms thats not that much, compared to oil anyway!).

If you look at the volume for yesterdays buying of this ETF, its over 6 million, a new record. The news was a lower than forecast drop, which seems to be all the rage for a bottom in this climate.

The price fell by 5% yesterday, so not always a good sign, but its rising today. If you think the £ will fall from this point against the dollar, that would also make you money on this, which I think is a double bonus.

DYOR

[h101] 20/8/2009 18:56

What does 52B mean?

[easyglider] 20/8/2009 14:40

Yes, but if I am correct, that is an increase of 52B from last week.
Please correct me if I am wrong.

[bottompicker] 20/8/2009 14:33

Actual came out at 52B, which should be really good news for higher gas prices, but hasnt seemed to have had much effect!

Sorta scratching my head atm!

[easyglider] 20/8/2009 14:09

BottomPicker,

Where did you get that forecast from ?

Cheers

[bottompicker] 20/8/2009 13:30

Natural Gas Storage results out in an hour

Previous 63B
Forecast 57B
Actual - wait and see!

[bottompicker] 20/8/2009 07:27

I must admit, I have been watching the gas price for a while, and it took a while for me to getting around to setting up my account to trade ETFS's. Just as well really, who would have thought that this would have gone from over 80 to 1.70

I expect to loose about 5% each month on contango, so hopefully we will start seeing supply dropping off. At this price, theres should be some signals coming up in the not to distant future.

[h101] 19/8/2009 14:37

Unfortunately I don't know what a bottom value is except by looking back historically. With an ETF one is limited to how far back it goes. I daresay I could look at the correlation between the ETF and gas prices then deduce a bottom for the ETF based on the lowest gas price over the last x years. Having said that, looking at the DJ Natural Gas subIndex over the last five years is no help though because it has been trending down since then!

The issue is complicated by using a leveraged ETF since it always has a negative bias due to how its price is determined.

Since this is a commodity based instrument I'd look at supply/demand/storage capacity - when we've filled available capacity then see that we no longer are filling it, that might be an indicator of increasing demand - so I might use that as a decider.

The other approach is as you say to dip in regularly. Although I'm not a follower of technicals, as long as the slope of the downward trend was low enough(e.g. a volatility of say x% over t months)I might think that even if I lost, the rate of loss would be low. By that I mean I might lose 10% over 3 months, which is better than losing 50% over one!

[bottompicker] 19/8/2009 14:09

Hi H101, sorry to hear you got burnt. Best advice I can give is to drip feed in over time.

Just to back up my point, what would you do now? Its gone up. How do you know if 1.68 wasnt the bottom? When this hits 2, how do you know to buy then? If it then hits 3, then what? Buy then?

I think theres risk when ever you buy, but if you buy at the cheapest price, the upside is the greatest. You may find that pretty soon you have got your money back, and hold on for further upside.

Everytime I have followed the crowd, I seem to have always got the rug pulled out from under me. What I tend to do is think about what the bottom should be, knock off another 20-30% then enter at that point, averaging down if I can afford it and I still believe in it. Hope that helps

[bottompicker] 19/8/2009 13:01

I dont think it is better to wait for it to bottom, because every trader on the planet is waiting for it to bottom. When it does, you'll get a big spike off the bottom, and everyone will be saying yes - it was at a crazy price. Then it will double or triple and the banks will recommend you buy it (off them lol).

What do you think a fair price to pay is? This is my first shot at an ETFS, and still dont fully understand how contango will effect the rise, so don't take my word for it, but I know where my money is.

[h101] 19/8/2009 12:19

However volumes have increased significantly since April. I leaped in with a similar attitude and got my fingers burnt. I guess everyone else thought it had bottomed yet here we are. Better to wait for the turn to be proved or average down.

[bottompicker] 19/8/2009 09:26

This is crazy isnt it? You could loose all your money, or double it 10 times over, surely there cant be a better risk/reward play than this?

When people start piling in at when this is ten times its current value, I will roll my eyes in disbelief.

[h101] 19/8/2009 07:03

Not a clue but IMHO still down until autumn.

[harryh05] 18/8/2009 19:54

Hi,

Does anyone have a clue where this is heading?

[gdasinv2] 11/8/2009 08:54

Winter is coming, This will shoot at least 5 times in 2 months and 10 times by EOD, when OIL is already at 75$, If it hit 85-90 by EOD, LNGA will shoot up at least 8 to 10 times.

[martest] 03/8/2009 20:31

tHIS IS ONE OF TE FASTEST MOVING SHARES BECAUSE OF THE LEVERAGE.iT YO-YOSUP AND DOWN.nOW THAT THERE IS A SENSE OF RECOVERY ECONOMICALLY AND THE DEMAND FOR GAS INCREASES THIS share price CAN SHOOT UP AND UP SO FAST.wOULD NOT SURPRISE ME TO BE A 10 BAGGER+ BY OCTOBER/NOVEMBER.dyor.

[gdasinv2] 03/8/2009 13:19

We will go back....again to same root when OIL will bridge 100$ and thus LANG too climbe. Both LOIL and LNGA is best to buy OIL and GAS, I bought fro 5000pounds, sit back and njoy