Price of natural gas has been on a run lately. There are a few factors causing this run. First, the inventory level was the lowest in 5 years span. We had a hotter than usual summer which lead to higher usage of natural gas. Moreover, scientists stated that we are expecting a colder winter this year, which means higher use of natural gas for electricity and heating is expected. Natural gas is going to be volatile in short term. Volatility offers traders profitable opportunities when execute trades properly. DGAZ and UGAZ are 3 times leveraged ETNs which track the price movement of natural gas. DGAZ is the short position whereas UGAZ is long. We recommend for day trades only with these two tickers as volatility brings higher than normal amount of risks. When the price of natural gas is on an uptrend movement, scalping UGAZ is not a bad option. On the other hand, we see an easier scalping opportunity in DGAZ when the price is on a downtrend. We don’t recommend to hold them for the long term. Short term swing or day trades are preferable. Please don’t use naked option sells on these tickers. It’s very risky as your accounts could be wiped out overnight due to volatility. Trade accordingly.
P.S. We day trade these two tickers on volatility. No positions as we are writing this post.