Larry Berman CFA, CMT, CTAHBP NYMEX Nat'l Gas Bull+HNU.TODON'T BUYSep 14, 2020

Double exposure to the natural gas market. Canadian and US stocks, in general, have a volatility of about 15%. The volatility of nat gas is in the range of 80%. So this one is a wild monster to deal with.

He's actually a bit bearish on energy because of the stated intention of the US government to pump oil and nat gas to lubricate the economy and economic growth. More production will hamper price increases. Secular pricing will be lower, spikes will only be cyclical.

The other side is that we have lots of AI power demand. Longer term, we could maybe see so much demand that prices get up off the floor.

He's not a commodity expert. PKI has leverage so it's volatile. You must be confident that the underlying commodity will move up. He's never seen anyone make money in this sector. You'd have to constantly watch oil prices to hold this.

You only want to use this as a short-term vehicle for a seasonal trade. Not a buy-and-hold.

Disclosure:  He works for Global X (formerly Horizons).

It's leveraged. Don't buy it.

Complicated product that are not meant for average investor. Must be watched daily. Not a linear response to natural gas prices. Would not recommend for the long term investor. High volatility. 

A Levearge ETF. He advised to steer clear of these kinds of investment. They are trading vehicles the are intended to be watched daily. D

A double leverage natural gas ETF. He would not hold for the long term. Go for HNY-T as you lose 3-5% per month based on losses in the nature of the futures contracts in the leveraged ETF. He also likes the Junior Natural Gas ETF ZJN-T for longer term.

The problem with playing these leveraged products is that it is basically a gamble. You are anticipating a short-term move, and in terms of the double leveraged Bull, you are hoping that is going to be positive. This is really a gambling tool, and not something he would like to play. Natural gas has been struggling at its 200-day moving average and is starting to curl lower. The builds in inventory levels over recent weeks have been higher than average. Going forward, we are looking at moderate temperatures in the US, so it doesn’t present that bullish backdrop for a near term rise.

Continue to Short this? Natural gas prices are probably coming down over the next couple of years. If this is a levered play, you want to be very, very careful. The way they do these things is that they roll them on a futures contract, and then have to keep buying the expiry. If you want to play natural gas, be very careful of the underlying structure that you are looking at.