Implied volatility

On November 9, 2017, natural gas had an implied volatility of 43.5%—9.4% more than its 15-day average.

Natural gas (GASL) (GASX) prices and implied volatility are usually inversely related. On March 3, 2016, natural gas active futures fell to a 17-year low closing, while the implied volatility was at 53.8%. Since then, the implied volatility has fallen 19.1%, while natural gas prices have risen 95.2%.

Natural Gas Could Reach the $3.4 Mark Next Week

Natural gas prices in the next seven days

Based on the implied volatility of 43.5% and a standard deviation of one, natural gas active futures could settle between $3­ and $3.4 per MMBtu (million British thermal units). The model is based on the assumption of a normal distribution of prices. The period for this price range is the next seven days with a probability of 68%.

On November 9, 2017, natural gas active futures settled at $3.2 per MMBtu—6% below the $3.4 mark.

If natural gas prices rise more, it could be a positive development for the United States Natural Gas Fund LP (UNG), the ProShares Ultra Bloomberg Natural Gas (BOIL), and the First Trust ISE-Revere Natural Gas ETF (FCG). These ETFs are supposed to track natural gas futures.

Read Natural Gas: Will the Bullish Sentiment Continue? to learn more about natural gas prices.

Latest articles

In this year’s annual shareholder letter, Berkshire Hathaway (BRK.B) CEO Warren Buffett discussed the possibility of an “elephant-sized acquisition."

The esports industry is thriving. Let's take a look at the expected growth in esports viewership and the total available market in the space.

Today, Jeff Bezos detailed Amazon's plans for sweeping sustainability initiatives. Bezos's announcement came a day before the Global Climate Strike.

Integrated oil companies ExxonMobil and Chevron have strong upstream portfolios, which play a vital role in determining their profitabilities.

Adobe (ADBE) released its fiscal 2019 third-quarter earnings results on September 17. Overall, its third-quarter results exceeded expectations.

There's been a lot of talk about defensive stocks amid broader markets' volatility. Southern Company stock has rallied almost 40% year-to-date.