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Vikram Saxena » Comments » Single Comment
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NGAnalyst:
Aug 28 00:22 am
|Rating:
0
0
All Comments by Vikram Saxena »Natural Gas ETFs: Not a Good Investment [View article]
1) GAZ was trading without any premium to NAV till they too decided not to issue new shares. Last Thursday (8/20) the news leaked and since then it has built up a healthy premium to NAV which lead to the run its price. The spread between NGX9 and NGV9 has also increased; it is showing up in a percentage change plot of GAZ.IV versus UNG.IV
2) UNG does not lose value just because of the roll. The total value does not change simply because they now own smaller number of contracts at a higher price. However UNG does not benefit from the higher price of the new contract because of negative roll yield. The spread between the two contracts (plot NGV9 - NGU9) widens just prior to the roll date, further short-changing UNG holders.