This trade may carry near-term risk. But the reward far outweighs risk at this point.
Natural gas has collapsed.
Every one hates it.
But no one is paying attention.
Investors are nervous reading there’s still no reason to buy. But they’re not paying attention to the opportunity we see every winter.
The last time natural gas fell this low, it rocketed 100% higher on historical demand for heating fuel in the winter.
In 2013, after a late start, natural gas raced 42% higher on winter.
While natural gas has been hit over the last few weeks based on warmer weather trends, the season for trading this commodity is just beginning.
A new cold blast is expected to drive U.S. temperatures 25 to 40 degrees lower than normal over the next several days. And that new outlook offers us an opportunity to profit from the over-extended sell off in natural gas.
Even Morgan Stanley believes that gas prices have a potential to rebound early 2015 as forecasts point to much colder weather.
The next three months could be an extraordinary time for smart investors to profit from the move in natural gas prices on cold weather predictions.
While there is risk here, consider buying to open the United States Natural Gas (UNG) April 2015 14 call up to $1.90.
Ian L. Cooper
Inside Value Trader