The sleeping “widowmaker”… NatGas version

January 13, 2020 by Jim Colburn Leave a Comment

March/April natural gas moved into flat/negative territory… Lots of supply, warm weather will do this… Note the CME chart below showing open interest in option strikes related to this spread… We’ve all ready blown through strikes with significant open interest… The spread option expires on Feb 25… The spread is known as the widowmaker because of it’s potential to move violently and blow up traders…

Here is a snapshot of open interest in natural gas spread options from the CME (G4H0 is the March/April spread option):

Commodity Research Group (CRG), founded by veteran analyst Edward Meir, is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct commodity hedging strategies.

Our associates bring decades of experience to the table, as they seek to help our clients understand the markets. CRG will distill the myriad of pricing variables mentioned above into coherent research that is to-the-point and tailored to a clients hedging or pricing needs. In addition, CRG is available for consulting assignments and speaking engagements. CRG does not manage money or trade for itself.

Reader Interactions

Leave a Reply Cancel reply