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Scratch the $DGAZ trade

By: StudioCity'98



I'm long $DGAZ from $2.60. But it's no longer a low-risk trade. It was announced that it's going to be reversed split 1:20 (1 for 20) on Monday 11/26/18.  Among other kooky stuff, that's going to help increase its structural decay.

Natty Gas will normalize. But now the Futures market has gone from Contango to Backwardation due supply delivery issues from the cold weather.

The low-risk trade now is a "Calander Spread" in the Futures market by selling the front month (Dec '18) and buying out on the term structure (Apr '19), while hedging Gamma risk with Options.  Not an easy trade unless one is very familiar with trading vanilla derivatives. 

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