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Natural Gas Futures and Options

Free Natural Gas Futures Trading eGuide

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Natural Gas Futures (Physical) are an outright natural gas contract between a buyer and a seller that offers opportunities for risk management of the highly volatile pricing of natural gas

The contract:Henry Hub Natural Gas

  • Is widely used as a national benchmark price for natural gas, which accounts for almost a quarter of United States energy
  • Reflects a vigorous basis market based on the pricing relationships between Henry Hub and other important natural gas market centers in the continental United States and Canada
  • Is the second-highest volume futures contract in the world based on a physical commodity

Natural Gas Futures: Things to know:

  • The 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.
  • Traded via open outcry, electronically on CME Globex, and off-exchange for clearing only as an EFS, EFP or block trade through CME ClearPort
  • Trading at settlement is available for the front three months, subject to the existing TAS rules of the underlying respective physical products
  • Option types: American, calendar spread, European, daily

Natural Gas Futures Contract Specs

Henry Hub Natural Gas Futures

Code NG
Venue CME ClearPort, CME Globex, Open Outcry (New York)
Hours
(All Times are New York Time/ET)
CME Globex: Sunday - Friday 6:00 p.m. - 5:15 p.m. New York time/ET (5:00 p.m. - 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
CME ClearPort: Sunday - Friday 6:00 p.m. - 5:15 p.m. New York time/ET (5:00 p.m. - 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
Open Outcry: Monday - Friday 9:00 a.m. - 2:30 p.m. ET (8:00 a.m. - 1:30 p.m. CT)
Contract Unit 10,000 million British thermal units (mmBtu).
Pricing Quotation U.S. dollars and cents per mmBtu.
Minimum Price Increment $0.001 (0.1¢) per mmBtu ($10.00 per contract).
Maximum Daily Price Fluctuation $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. When trading resumes, the limit is expanded by $3.00 per mmBtu in either direction. If another halt were triggered, the market would continue to be expanded by $3.00 per mmBtu in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session.
Termination of Trading Trading of any delivery month shall cease three (3) business days prior to the first day of the delivery month. In the event that the official Exchange holiday schedule changes subsequent to the
listing of a Natural Gas futures, the originally listed expiration date shall remain in effect. In the event that the originally listed expiration day is declared a holiday, expiration will move to the
business day immediately prior.
Listed Contracts The current year plus the next twelve years. A new calendar year will be added following the termination of trading in the December contract of the current year. On CME Globex: The current year plus the next eight years.
Trading at Settlement (TAS) Trading at settlement is available for spot (except on the last trading day), 2nd and 3rd months and subject to the existing TAS rules. Trading in all TAS products will cease daily at 2:30 PM Eastern Time. The TAS products will trade off of a "Base Price" of 0 to create a differential (plus or minus 10 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a "traditional" TAS trade which will clear exactly at the final settlement price of the day.
Settlement Type Physical
Grade and Quality Specifications Natural Gas meeting the specifications set forth in the FERC-approved tariff of Sabine Pipe Line Company as then in effect at the time of delivery shall be deliverable in satisfaction of futures
contract delivery obligations.
Position Limits NYMEX Position Limits
Rulebook Chapter 220
Exchange Rule These contracts are listed with, and subject to, the rules and regulations of NYMEX.

Natural Gas Futures Options

Underlying Futures Henry Hub Natural Gas Futures (NG)
Product Symbol ON
Venue CME Group ClearPort, Open Outcry (New York)
Hours
(All Times are New York Time/ET)
CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
CME Globex Sunday – Friday 6:00 p.m. – 5:15 p.m. (5:00 p.m. – 4:15 p.m. Chicago Time/CT) with a 45-minute break each day beginning at 5:15 p.m. (4:15 p.m. CT)
Open Outcry: Monday – Friday 9:00 AM to 2:30 PM (8:00 AM to 1:30 PM CT)
Contract Unit A Henry Hub Natural Gas Put (Call) Option traded on the Exchange represents an option to assume a short (long) position in the underlying Henry Hub Natural Gas Futures traded on the Exchange.
Price Quotation U.S. dollars and cents per mmBtu
Option Style American
Minimum Fluctuation $0.001 per MMBtu
Expiration of Trading Trading ends at the close of business on the business day immediately preceding the expiration of the underlying futures contract.
Listed Contracts Consecutive months for the balance of the current year plus 5 additional years.
Strike Prices Twenty strike prices in increments of $0.05 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 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 futures contract. Strike price boundaries are adjusted according to futures price movements.
Settlement Type Physical
Position Limits NYMEX Position Limits
Rulebook Chapter 370
Exchange Rule These contracts are listed with, and subject to, the rules and regulations of NYMEX.

See Also:Crude oil; Heating Oil; Natural Gas; Ethanol