Comments on: A Case for Natural Gas https://phantasmix.com/a-case-for-natural-gas/ Stock Market and Personal Finance Wed, 02 Jan 2008 02:59:45 +0000 hourly 1 https://wordpress.org/?v=6.8.1 By: Phantasmix https://phantasmix.com/a-case-for-natural-gas/comment-page-1/#comment-615 Sun, 12 Aug 2007 04:19:31 +0000 http://www.phantasmix.com/index.php/2007/08/10/a-case-for-natural-gas/#comment-615 I should’ve mentioned my time horizon: under 4 months. I want to try timing it and catch a few points on the way up.

Futures are up, hurricane season may soon start, and I see UNG going up. I think a lot of people may buy into this ETF without looking into the MER and other details. Seriously…

Right now I’m 1.5% up after commissions both ways. My target is around 10% net and then I’m out. According to the link you posted this is just the right strategy for UNG (short- to mid-term hold).

]]> By: macdonald https://phantasmix.com/a-case-for-natural-gas/comment-page-1/#comment-614 Sun, 12 Aug 2007 02:28:18 +0000 http://www.phantasmix.com/index.php/2007/08/10/a-case-for-natural-gas/#comment-614 s not just the cost of the MER. When future prices are in contango (far contracts have higher prices) like natural gas is now, the ETF has another hurdle to overcome: the roll of the contracts toward expiration. Say the fund buys the 4 month futures contract at $20 when the spot price is $15; then as the contract rolls toward expiration, its price declines toward the spot price. So even if the altter stays the same, the ETF will show a loss equal to the MER plus the decline in the futures from $20 to $15. This link explains it more (see Jbiano’s comments especially) http://etf.seekingalpha.com/article/32864]]> Some say you are better off investing in producers unhedged to spot prices than buying a commodity ETF like UNG. It’s not just the cost of the MER. When future prices are in contango (far contracts have higher prices) like natural gas is now, the ETF has another hurdle to overcome: the roll of the contracts toward expiration. Say the fund buys the 4 month futures contract at $20 when the spot price is $15; then as the contract rolls toward expiration, its price declines toward the spot price. So even if the altter stays the same, the ETF will show a loss equal to the MER plus the decline in the futures from $20 to $15. This link explains it more (see Jbiano’s comments especially)
http://etf.seekingalpha.com/article/32864

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