NYMEX
Natural Gas Future and Natural Gas Option
Market
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Free Natural Gas Futures trading E Guide
Dear clients and students of the commodity markets, the
following information should answer your questions about Natural Gas Futures and
Options. You may also call 800-915-4716 or email
tkfutures@earthlink.net your natural gas
future and natural gas future options questions to be answered by a seasoned professional.
Natural Gas Futures Market Facts
Did you know that 900
of the next 1000 US power plants will use natural
gas within the next few years? Domestically produced and readily available to
end-users through the existing utility
infrastructure, natural gas has also become
increasingly popular as an alternative
transportation fuel.
Natural gas accounts for almost a quarter of United
States energy consumption, and the NYMEX Division
natural gas future contract is widely used as a
national benchmark price. Roughly 50% of the heating needs for the United States
are supplied by natural gas. The natural gas futures contract
trades in units of 10,000 million British thermal
units (mmBtu). The natural gas futures price is based on delivery at the
Henry Hub in Louisiana, the nexus of 16 intra- and
interstate natural gas pipeline systems that draw
supplies from the region's prolific gas deposits.
The pipelines serve markets throughout the U.S. East
Coast, the Gulf Coast,
the Midwest, and up to the Canadian border. Many savvy end users of natural gas
use natural gas futures and natural gas options to hedge their price risks
related to higher prices. Contact us for more
information about natural gas hedging strategies using natural gas futures and
natural gas future options.
Click here and learn about other commodity markets.
During the September 11 terrorist attacks the NYMEX
was destroyed but within days the natural gas
futures and natural gas options markets were trading
again. This is a testament to the strength and
viability of the energy future markets. The natural gas futures markets are a
perfect example of the pure bastion of capitalism that the futures markets
represent.
There are many corporate uses for natural gas futures.
The spread between the natural gas future
contract and electricity future contract– the spark spread – is another natural
gas hedging procedure used
to manage natural gas futures price risk in the power markets and utility plants.
Contact us at tkfutures@earthlink.net for specific natural gas
future and option data or click here now open an
account to open your natural gas
future or option account today.
Because of the volatility of natural gas
future prices, a
vigorous basis market has developed in the pricing
relationships between Henry Hub and other important
natural gas market centers in the continental United
States and Canada. The Exchange makes available for
trading a series of basis swap futures contracts
that are quoted as price differentials between
approximately 30 natural gas futures pricing points and
Henry Hub. The basis contracts trade in units of
2,500 mmBtu on the NYMEX ClearPortsm trading
platform. Transactions can also be consummated
off-Exchange and submitted to the Exchange for
clearing via the NYMEX ClearPortsm clearing website
as an exchange of natural gas future contracts for physicals or exchange
of futures for swaps transaction.
The
e-miNYsm natural gas future contract, designed for
investment portfolios, is the equivalent of 2,500 mmBtu of natural gas, 50% of the size of a standard
natural gas future contract. The natural gas futures contract is available for
trading on the Chicago Mercantile Exchange (CME)
GLOBEX® electronic trading platform and clears
through the New York Mercantile Exchange
clearinghouse
Contract Specifications
Henry Hub Natural Gas Future and Natural Gas Option Contract
Trading Unit
Natural Gas
Futures: 10,000 million British thermal units
(mmBtu).
Natural Gas options: One NYMEX Division natural gas future
contract.
Price Quotation
Natural Gas
Futures and Options: Dollars and cents per mmBtu,
for example, $2.850 per mmBtu.
Trading Hours
Natural Gas
Futures and Options: Open outcry trading is
conducted from 10:00 A.M. until 2:30 P.M.
After hours natural gas future trading is conducted via the NYMEX ACCESS® internet-based trading platform
beginning at 3:15 P.M. on Mondays through Thursdays
and concluding at 9:30 A.M. the following day. On
Sundays, the session begins at 7:00 P.M. All times
are New York time.
Trading Months
Natural Gas
Futures: 72 consecutive months commencing with the
next calendar month (for example, on January 2,
2002, trading occurs in all months from February
2002 through January 2008).
Options: 12 consecutive months, plus contracts
initially listed 15, 18, 21, 24, 27, 30, 33, 36, 39,
42, 45, 48, 51, 54, 57, 60, 63, 66, 69, and 72
months out on a March, June, September, December
cycle.
Minimum Price Fluctuation
Natural Gas
Futures and Options: $0.001 (0.1¢) per mmBtu ($10.00
per contract) Therefore a $1 move up or down is equal to $10,000 per natural gas
futures contract.
Maximum Daily Price Fluctuation
Natural Gas
Futures: $3.00 per mmBtu ($30,000 per contract) for
all months. If any contract is traded, bid, or
offered at the limit for five minutes, trading is
halted for five minutes.
Natural Gas
Options: No price limits.
Last Trading Day
Natural Gas
Futures: Trading terminates three business days
prior to the first calendar day of the delivery
month.
Natural Gas options: Trading terminates at the close of business
on the business day immediately preceding the
expiration of the underlying natural gas futures contract.
Exercise of Options
By a clearing member to the Exchange clearinghouse
not later than 5:30 P.M. or 45 minutes after the
underlying natural gas future settlement price is posted,
whichever is later, on any day up to and including
the natural gas options expiration.
Option Strike Prices
Twenty strike prices in increments of $0.05 (5¢) per
mmBtu above and below the at-the-money strike price
in all months, plus an additional 20 strike prices
in increments of $0.05 per mmBtu above the
at-the-money price will be offered in the first
three nearby months, and the next 10 strike prices
in increments of $0.25 (25¢) per mmBtu above the
highest and below the lowest existing strike prices
in all months for a total of at least 81 strike
prices in the first three nearby months and a total
of at least 61 strike prices for four months and
beyond. The at-the-money strike price is nearest to
the previous day's close of the underlying natural
gas future
contract. Strike price boundaries are adjusted
according to natural gas futures price movements.
Trading Symbols
Futures: NG
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Open an Account today
To learn more about the energy futures visit
unleaded gas futures,
crude oil futures and
heating oil futures.
To see more on option trading visit
future market research.
To visit weekly commentary click
natural gas futures.
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