Natural gas’s implied volatility

On October 5, 2017, the implied volatility of US natural gas (UNG) (FCG) (BOIL) active futures was at 33.1%, or 7.3% below the 15-day average.

Could Natural Gas Fall below the $2.8 Mark Next Week?

In most instances, natural gas prices and implied volatility have moved in opposite directions. For example, when US natural gas prices were at their 17-year low on March 3, 2016, the implied volatility spiked to 53.8%.

Between March 3, 2016, and October 5, 2017, this implied volatility fell to 38.5%. But there was a 78.3% jump in natural gas active futures during this period.

Where natural gas prices could go next week

In the next seven days, there’s a 68% chance that natural gas futures could close between $2.79 and $3.06 per MMBtu (million British thermal units). This price range was calculated by assuming that prices are normally distributed, with an implied volatility of 33.1% and a standard deviation of one.

If natural gas prices fall below the $2.8 mark, it could be important for ETFs like the Direxion Daily Natural Gas Related Bull 3X ETF (GASL), the First Trust ISE-Revere Natural Gas ETF (FCG), and the Direxion Daily Natural Gas Related Bear 3X ETF (GASX).

To learn more about the potential future movements of natural gas prices, check out Market Realist’s series Have Natural Gas Prices Turned Bearish?

Latest articles

25 Jun

Gold Breaches $1,400: What’s the Next Stop?

WRITTEN BY Anuradha Garg

Gold is now trading close to a six-year high following the Fed’s dovish pivot at its June policy meeting. After being range-bound for the last five years, gold has finally broken out and its outlook is bullish.

Shares of the J.M. Smucker Company (SJM) are up 29.8% year-to-date as of June 24 and have outperformed the broader markets. The company's acquisition of Ainsworth Pet Nutrition and its focus on high-growth categories via divestitures have supported its stock so far this year.

On June 25, General Motors (GM), America’s largest auto company, announced its plan to invest $20 million into its Arlington Assembly plant in Texas, according to Reuters. With the new investment, the company aims to upgrade its equipment before launching its full-size SUVs.

Shares of high-growth technology company ServiceNow (NOW) have gained close to 16.0% since April 2019. It's gained over 60.0% since the start of 2019. It also had an encouraging run in 2018, when it gained 32.0% in market value.

25 Jun

Ford to Announce Q2 US Sales on July 3: What to Expect

WRITTEN BY Jitendra Parashar

Earlier today, Ford (F) said that it would announce its second-quarter US sales data on July 3. In the first quarter, the company reported a 1.6% YoY decline in its US sales to 590,249 vehicle units. During the first quarter, Ford’s truck sales rose by 4.1%, and its SUV sales went up by 5.0% on a YoY basis.

On June 25, Credit Suisse initiated coverage on Chipotle Mexican Grill with an “outperform” rating and a target price of $870—a return potential of 20.1% from its stock price of $724.13 on June 24.

172.31.38.64