guspenskiy13
976 posts
msg #122138
- Ignore guspenskiy13
modified |
12/3/2014 6:52:43 PM
(GASL) and (UGAZ) are absolutely different, but related;
(UGAZ) tracks " S&P GSCIŽ Natural Gas Index ER" through futures. Unleveraged alternative is (UNG).
(GASL) tracks "ISE-Revere Natural Gas Index (FUM)" which consists of weighted stock combo though many different ways. Unleveraged alternative is (FCG).
One major difference between those two is the decay.
It's hard to tell how much decay has GASL experienced on a short term basis - but Direxion said it's 3-year decay is 16.74%. However, I looked at the 4-year chart and found that in June, 2014 it has underperformed by ~50% its underlying.
UGAZ since inception date, which is 2 years 9 months away (2/7/2012), underperformed by ~57%.
Anyways, it seems that because of the structure and just based on the numbers, UGAZ decays more. Correlation between the two is 0.54...which is nothing meaningful IMO.
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Bottom line:
As energy sector and possibly oil rebounds, gas companies (FCG, GASL) will rebound (correlation of 0.9). I am not speculating on the oil prices, opec and geopolitics - but it seems that the last gap was an exhaustion one, similar to what GDX experienced before rebounding.
As for natural gas itself (UNG, UGAZ) - it's range-bound/seasonal/mean-reverting... which could spike up with the storage amount below average under bad circumstances...but who knows?
That's why I said that the pair UGAZ/DGAZ is so good for double short....it's not trending for long....so both decay....while when leveraged instrument trades in trend...their "leverage" actually INCREASES...just look at 2-year SPY vs UPRO... with SPY ~52.5%.... UPRO at over 220%....that's not 3X.
So overall... UGAZ has lower odds than GASL....based on the stats and some fundamentals... but who knows?
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guspenskiy13
976 posts
msg #122146
- Ignore guspenskiy13
modified |
12/4/2014 12:36:59 PM
gas to new lows, and whether it's meaningful or not - at the trend since April '12.
could go lower, momentum basically didn't change for the past three days
accurate short of hard-core decaying DGAZ any time soon....decay itself will yield so much
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shillllihs
6,045 posts
msg #122155
- Ignore shillllihs |
12/5/2014 10:38:20 AM
Bought some UGAZ yesterday @ 8.81
This could be a 2-3 bagger in 2 months.
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shillllihs
6,045 posts
msg #122156
- Ignore shillllihs |
12/5/2014 11:13:54 AM
Oh so UBER
UGAZ 11:11am EST 9.42 Up 0.73 Up 7.13%
I'm gonna have the Filipino wife go out to get some Beef Liver to fry tonight!!
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shillllihs
6,045 posts
msg #122159
- Ignore shillllihs |
12/5/2014 4:34:21 PM
UGAZ 04:00pm EST 9.79 Up 1.10 Up 12.66%
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guspenskiy13
976 posts
msg #122164
- Ignore guspenskiy13 |
12/7/2014 2:28:54 PM
Nice job on gas, I was travelling and hesitated to pull the trigger - but it still represents a nice Risk/Reward opportunity.
Tesla @ 28 bil and Uber @ 40 bil. TUlipomania of the 21st century.
I've heard that the "new generation" of investors only like to invest in the things that they know - like tech. Better put money into utilities with 69% higher CAGR than SPY.
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shillllihs
6,045 posts
msg #122168
- Ignore shillllihs
modified |
12/7/2014 9:13:36 PM
Thanx Gus. I've been saying utilities were the new thing for months Keep up the good research.
Just goes to show you that when you have several goofs maligning you, to disregard them. At first it will feel lonely
at the top then you will feel a comfort knowing you were on to something that the rest were not.
There will always be crippled minds that will cast stones.
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guspenskiy13
976 posts
msg #122174
- Ignore guspenskiy13
modified |
12/8/2014 2:25:47 PM
Thanks!
Utilities and other low-beta instruments are the long-term out-performers, sometimes including CAGR (as utilities are) and sometimes not. However, their other superior qualities, such as lower volatility and Max DD, allow them to outperform SPY by a large margin, when risk-adjusted risk of SPY through bigger position size.
Anyways, today was wild with consecutive losses in natural gas / energy and a magnificent gold miners rebound...
Currently short volatility, but with no thoughts of holding overnight...
Certainly got too greedy and ignorant trying to catch the falling knife in energy...
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shillllihs
6,045 posts
msg #122175
- Ignore shillllihs |
12/8/2014 3:43:00 PM
I like trading around a core. Seems to be the best of both worlds.
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guspenskiy13
976 posts
msg #122176
- Ignore guspenskiy13 |
12/8/2014 3:52:32 PM
So let's suppose you have 100% for volatility trading, what's your typical position size for different time-frames?
P.S.
To short this spike or not to short....that is the question...
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