Natural Gas Spread Betting Guide

Natural Gas Spread Betting Guide

Natural Gas Spread Betting Guide

arrow_forwardLive Natural Gas Chart
arrow_forwardLive Natural Gas Prices
arrow_forwardWhere to Spread Bet on Natural Gas
arrow_forwardHow to Spread Bet on Natural Gas


Live Natural Gas Chart and Prices



Where Can I Spread Bet on Natural Gas?

Most spread betting brokers offer prices and charts on commodities including Natural Gas e.g.:

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How to Spread Bet on Natural Gas

For example, let’s say that you are considering taking a position on Natural Gas, so you go on a spread betting site, e.g. Inter Trader, and see the real time market at:

Natural Gas (March) Futures: $2.444 – $2.474

This is an example of how it works…

Spread Betting Market: Natural Gas (March) Futures
Spread Betting Quote: $2.444 – $2.474
How the Market Works: You can speculate on the Natural Gas Futures market settling:

  arrow_upward  Higher than $2.474, or
  arrow_downward  Lower than $2.444

When the market closes on the expiry date for the ‘March’ futures spread betting market, 24 February 2012.

It is important to bear in mind that, as this is a futures market, your position will close when the March Natural Gas futures markets are settled, 24 February 2012. However, you can also decide to close your spread bet prior to the closing date.
Units (Points) Traded: Futures trades on the Natural Gas market are priced in £x per $0.001.

Where $0.001 is $0.001 of the energy’s price movement.

E.g. if Natural Gas changes by $0.050 then you would lose or win 50 times your stake.
Stake Size per Unit: You work out what to risk per $0.001, e.g. £2 per $0.001, £4 per $0.001, £15 per $0.001 etc.
Short Staking Exercise: If, as an example, your stake is £5 per $0.001 and Natural Gas moves by $0.028, you would win or lose £5 per $0.001 x $0.028 = £140.


Fully Worked Spread Trading Example | Taking a Bullish View of Natural Gas

Financial spread trading on the energy market to rise

You Work Out Whether to Go Long or Short: Where do you think that Natural Gas will close on 24 February 2012:

  arrow_upward  Higher than $2.474? or
  arrow_downward  Lower than $2.444?

You Might Choose to Go Long:   arrow_downward  Higher than $2.474
You Choose How Much to Risk, Let’s Say You Opt For: £2 per $0.001
Now What?
  • You make a gain of £2 for every $0.001 Natural Gas settles higher than $2.474
  • You make a loss of £2 for each $0.001 Natural Gas closes lower than $2.474
If You Are Spread Betting on a Market to Increase Your P/L = (Settlement Level – Opening Level) x stake per $0.001
 
Trading Situation 1 Natural Gas increases and the commodities spread betting market is adjusted and moved to $2.542 – $2.572.
Take Your Profit? At this point, you may choose to keep your bet open until expiry or close it, i.e. close your spread bet to lock in your profit. For this example, you decide to settle your bet at the current price by selling the market at $2.542.
Your P/L = (Settlement Level – Opening Level) x stake per $0.001
($2.542 – $2.474) x £2 per $0.001
$0.068 x £2 per $0.001
Your P/L = £136 profit
 
Trading Situation 2 Natural Gas falls and the spread trading market is revised to $2.400 – $2.430.
Limit the Loss? You could choose to let your futures trade run to expiry or close it, i.e. close your position and limit your loss. For this example, you decide to settle your position now and sell at $2.400.
Your P/L = (Settlement Level – Opening Level) x stake per $0.001
($2.400 – $2.474) x £2 per $0.001
-$0.074 x £2 per $0.001
Your P/L = -£148 loss


Worked Example | Selling Natural Gas

Spread betting on the energy market to go down in value

You Consider Whether to Buy or Sell: Does your research lead you to believe that Natural Gas will finish at on 24 February 2012:

  arrow_upward  Higher than $2.474? or
  arrow_downward  Lower than $2.444?

Let’s Assume You Choose to Go Short:   arrow_downward  Lower than $2.444
You Decide Your Stake Size, Let’s Say You Choose: £1 per $0.001
So What Now?
  • You make a loss of £1 for each $0.001 Natural Gas settles above $2.444
  • You make a gain of £1 for each $0.001 Natural Gas settles lower than $2.444
When Going Short of a Market Your P/L = (Opening Level – Settlement Level) x stake per $0.001
 
Trading Situation 3 Natural Gas decreases and the quote for the market is revised and moved to $2.330 – $2.360.
Lock in a Profit? You may choose to let your futures trade run to expiry or close it, i.e. close your spread bet for a profit. For this example, you decide to close your trade at the current rate and buy at $2.360.
Your P/L = (Opening Level – Settlement Level) x stake per $0.001
($2.444 – $2.360) x £1 per $0.001
$0.084 x £1 per $0.001
Your P/L = £84 profit
 
Trading Situation 4 Natural Gas climbs and the quote for the futures market is revised and is set at $2.506 – $2.536.
Limit Your Loss?You can choose to keep your futures spread bet open until expiry or close it to limit your losses. In this case you opt to settle your bet at the current market price by buying at $2.536.
Your P/L = (Opening Level – Settlement Level) x stake per $0.001
($2.444 – $2.536) x £1 per $0.001
-$0.092 x £1 per $0.001
Your P/L = -£92 loss


Natural Gas Notes:

  • Spread betting quote obtained from Inter Trader, 2 February 2012
  • Investors can also trade on Natural Gas in euros per $0.001 and US dollars per $0.001
  • In addition, financial spread betting also allows you to access a wide range of other markets, for additional details read:

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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