The U.S. Natural Gas Fund's Slight Bounce (3% Since Friday)

Natural gas prices hit a 2010 bottom last week and on Friday the United States Natural Gas Fund, LP (NYSE:UNG) got down to $6.19 a share.  Since hitting a new 52-week low on Friday, the UNG has inched up 3.13% and today's its shares are just under $6.40. 

Thanks to some analysis on the puts being played on the U.S. Natural Gas Fund (UNG) by theStreet.com, we may have finally seen a bottom in the fund.

United States Natural Gas (UNG) shares have traded between $6.19 and $12.22 over the past 12 months.  After Friday's brutal session the UNG has recovered and gained 3.13% from its 52-week low.  Last Thursday natural gas prices hit a 2010 low as the contract for September delivery per 1,000 cubic feet struck $3.79.  Right along with it the United States Natural Gas Fund, LP (UNG) sank to a new 52-week low and the pain continued on Friday when it bottomed at $6.19.  New lows for the UNG and natural gas prices came after Big Brother (the U.S. Government) reported a rise in U.S. supplies. 

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Put Sellers See Bottom in UNG |  By Henry Schwartz
(theStreet.com) U.S. Natural Gas Fund (UNG)  traded heavily on Friday, with investors selling-to-open 6 strike puts. The October 6 contract was the most active. More than 75,000 traded and 92% traded on the bid, suggesting sellers were dominating the action. Open interest increased by more than 60,000 to 113,000 contracts, and is now the largest position in the gas fund.

September 6 puts saw similar action. Natural gas prices have been under pressure for the past few months, falling from $5.33 in mid June to $4.81 Friday, or 28.7%. These put sellers might be calling a bottom in the ETF, which tracks natural gas prices through futures. In other words, they might think that natural gas prices will heat up heading into the colder winter months. 

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