DailyPlay – Opening Trade (UNG) – September 9, 2022

View UNG Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 14 Contracts October 21, 2022 $27/$24 Put Vertical Spreads @ $1.48 Credit.

Total Risk: This trade has a max risk of $2,128 (14 Contracts x $152).

Counter Trend Signal: This is a Bullish trade on a stock that is experiencing a mildly bearish trend. 

1M/6M Trends: Mildly Bearish/Bullish

Technical Score: 1010

OptionsPlay Score: 108

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note these prices are based on the previous day’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. This will be reflected in the Portfolio tab within the OptionsPlay platform.

Investment Rationale

Before the market open on Monday, Rick laid out a bearish tactical case for Natural Gas given the excessive bullishness from traders despite a bullish longer-term view. With Natural gas now over 21% lower in 2 weeks and 12% in the past 4 trading sessions, I see an opportunity to play for a neutral bounce. This also coincides with a -9 Setup on the Daily Chart and the Daily Cloud top acting as a level of support for natural gas. Additionally, the elevated implied volatility on this selloff provides an opportunity to harvest volatility by selling a Put Vertical for nearly 50% of the vertical width.

Sell to Open Oct 21 $27/$24 Put Vertical @ $1.48 Credit.

UNG – Daily