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UGAZ

Can UGAZ Recover? Comparing UGAZ and Natural GasA serious look at what to expect from UGAZ if natural gas changes it's trend and starts a bull rally. Many are stuck in UGAZ since 2019, natural gas is down 47% and UGAZ 89% from the November high. UGAZ is not down 3 times natural gas due to the rebalancing that occurs, unless there is a decline of more then 33% in one day it is not possible for UGAZ to go to $0. I must warn that this is hypothetical and to show the problem with waiting for UGAZ to recover. If natural gas breaks to new lows the percent UGAZ goes up will remain about the same but it will be from a lower dollar value. It is likely at some point in the next 1-2 years natural gas makes it back to $2.90 from the current lows that will be about 90%. Since UGAZ moves 3 times natural gas that is about 270% but due to the decay UGAZ experiences it is more like to go up a maximum of 180%. Generously using the 270% that is about $80. if we use the more realistic 180% that is $62. These number are well below what most would have bought UGAZ for in 2019. UGAZ is an extremely risky investing product and unless you are very experienced and completely understand how it works you should not consider investing in it. See charts below for potential downside and upside going forward.
U
by Natural_Gas_Trader
UGAZ Performance During 2012 and 2016 RalliesThis is a continuation of my 2020 bull rally theory, finding the best way of capitalizing on the potential opportunity in front of us is the next step. UGAZ did not perform well long term during the bull rallies of 2012 and 2016, substantial gains were seen initially but the decay and volatility prevent this product from having long term gains. After the initial natural gas high the following heating season decay really took its toll on this product, with new lows before the final monthly cycle high. 2016 is substantially worse due to the extended time from the high in 2016 till the monthly cycle high in 2018. UGAZ does present a opportunity for swing trading as can be seen by the substantial moves over 4-6 week periods. The daily cycle can like be used to swing trade UGAZ. Leveraged ETN's are not designed to be held long term so these result do not surprise me. There are many things working against UGAZ, futures decay, futures contago, borrowing fees, rebalancing fees, rebalancing volatility. This product should not be used by novice investors!!!
U
by Natural_Gas_Trader
Shorting UGAZ - The Dangers and controlling the risk, Part 3This is a supplemental chart to the following post: Part 3 - How to Protect - Cover the Position ngetf.com This article is a continuation of a series where I've been exploring options to improve upon the idea of shorting UGAZ. Rather than just short the ETF alone and protect against a move backward, I am looking for a way to cover the short position by taking on a spread instead. The chart included isn't much for details this time. Most of my results are shared in Google Sheets. These documents can be found in the article linked above. The previous articles can be found at NGETF.com/notes. Thanks, and I hope you find some of this data useful Oldinvestor
NYMEX:NG1!Education
by oldinvestor
Shorting UGAZ - The Dangers and controlling the risk, Part 2This is a supplemental chart to the following post: Part 2 - How to Protect ngetf.com In the above post, I use the UGAZ chart to find the worst case scenario for shorting. In the first 371 days from Dec 21, 2017 to Jan 3, 2020, a short position will see the largest move UGAZ has ever made against a short position. In the next 371 days, the same UGAZ short position will go on to make more than an 80% gain. As anyone holding a short position should know, the amount of funds dedicated to a trade is critical to prevent blowing up an account. I begin with this, limiting a short position. In the coming posts, I will expand to using UNG or Natgas contracts to cover the short position. Also in this chart, I've marked the chart from Nov 1 of each year to near Feb 14, to point out the max backward moves for each winter. 2014 goes past 14th of February by 10 days, something that will not be missed when I get to analyzing the rest of the chart. Oldinvestor
UEducation
by oldinvestor
Short on Natural GasNGAS (Henry Hub) has unsuccessfully tried to break the DEMA 31 line, as highlighted in the chart in the ellipse. After the unsuccessful attempt, it broke down the channel until the 0.786 Fibonacci retracement. Our assumption is that it will continue the downfall until the support line at 2.197. After that, it will be safe to close half or more of the trade, because there is a good chance of a pullback there. If you decide to short and willing to take the additional risk, shorting UGAZ will be better than long on DGAZ because of the lower price of UGAZ (and subsequently- lower fees). More on our website: iam-unchained.com
FX:NGASShort
by IAmUnchained