“People have been up in arms for months now about the troubles at the United States Natural Gas Fund, LP (UNG), the ETF designed to track the price of natural gas. And, as far as I can tell, rightly so: the whole point of ETFs is that they were meant to be a nearly frictionless, relatively simple alternative to the clunky closed-end funds (CEF) and managed products that our parents and grandparents had to contend with. But UNG recently traded at a 19% premium to its net asset value (NAV), behavior far more fitting a CEF.  And until UNG begins issuing new shares, they functionally are a closed-end fund,”  CondorOptions Reports.

“Why the premium? Regulators are concerned that, given its size, (UNG) purchases of natural gas futures could overwhelm and distort the market. Some sort of CTFC action is expected, and one review suggests that any likely outcome will result in a dissipation of the fund’s premium to NAV. That’s a good reason not to buy UNG here, and it may offer a good opportunity for a stat arb play for those with the stomach and expertise: the trade would be to buy natural gas futures and sell short the ETF (or, since the shares are hard to borrow, competent options traders will establish a synthetic short position by selling calls and buying puts with the same strike price and expiration date) on the expectation of UNG eventually returning to its net asset value,”  CondorOptions Reports.

Full Story: HERE

The Natural Gas ETF (UNG) continued to tumble in today’s trading cutting into the premium and bringing the ETF closer to it’s NAV. 

 

Here is a snipet from our story: Take A Look At Some Other Options For The Natural Gas ETF (UNG)

Here are two other fund products that follow the Natural Gas industry which are work a look.  The first one is the First Trust ISE-Revere Natural GasETF (FCG) and the second ETN is the iPath DJ AIG Natural GasTR Sub-Idx ETN (GAZ). 

The ETF (FCG) seeks to replicate the ISE-REVERE Natural Gas index and the fund invests at least 90% of assets in common stocks that comprise the index.  Here is a look at the top ten holdings below:

TOP 10 HOLDINGS (FCG) ( 40.71% OF TOTAL ASSETS)   Company Symbol % Assets CIMAREX ENERGY CO (XEC) 3.94 GOODRICH PET HLD NEW (GDP) 3.71 MARINER ENERGY INC (ME) 4.29 NEWFIELD EXP COM (NFX) 3.72 PENGROWTH EGY UTS (PGH) 3.7 PIONEER NATURAL RES (PXD) 3.93 QUICKSILVER RES INC (KWK) 5.1 SANDRIDGE ENERGY INC (SD) 4.43 ST MARY LAND EXPL (SM) 3.82 W&T OFFSHORE, INC. (WTI) 4.07

And here is the profile for the other fund: The investment (GAZ) seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones-AIG Natural Gas Total Return Index. The fund is designed to reflect the performance of natural gas. The index is composed of the Henry Hub Natural Gas futures contract traded on the New York Mercantile Exchange.

 

GET A FREE TREND ANALYSIS  FOR ANY ETF HERE!

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2. Silver Price: Attention All Crybabies, Get The Checkbook Out! (SLV, GLD, AGQ, PSLV, ZSL)
3. Attention ETF Traders and Investors, U.S. Commodity Funds Launches The U. S. Copper Index Fund (CPER)
4. Beyond The U.S. Natural Gas Fund: 3 Intruiging ETFs To Play Natural Gas (GASZ, UNG, GAZ, NAGS, CHK, DVN)
5. Natural Gas Prices: Why It’s Time To Load Up On Natural Gas (UNG, FCG, DVN, CHK, GAZ)

ETF BASIC NEWS, NYSE:FCG, NYSE:GAZ, UNG