Natural Gas Prices Spark Heavy Trading on UNG, CHK, and AR

Natural gas ETF UNG is surging to new highs

Natural gas prices have been spiking in recent days, as predictions of a colder-than-normal winter exacerbate fears of low supplies. As a result, United States Natural Gas Fund (UNG) is trading up 17.1% today at $38.70 -- earlier hitting a three-year high of $39.87 -- and pacing for its first close above the 36-month moving average in four years. This is an escalation of a trend that was already in place on UNG: the shares are set for a fifth straight win, gaining roughly 60% in the past three months.

In the options pits, traders have actually been targeting puts. UNG's 10-day put/call volume ratio stands at 1.85 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranking in the 86th annual percentile. This preference for puts is continuing today, with the contracts outpacing calls 189,000 to 37,000, thanks to heavy trading at the weekly 11/23 31- and 32-strike puts, where spread activity could be taking place.

As for specific stock moves in the natural gas space, Chesapeake Energy Corporation (NYSE:CHK) is trading up 4.2% at $3.71. However, the shares are still trading below the 20-day moving average, which hasn't been topped since Oct. 22. Still, calls have the advantage today, with more than 23,000 crossing today compared to just 5,100 puts. This echoes the recent trend from the ISE, CBOE, and PHLX, where nearly 59,000 calls were bought to open in the past two weeks, compared to just 4,000 puts.

One natural gas stock trading lower today is Antero Resources Corp (NYSE:AR). last seen down 7.9% at $14.07. The shares earlier hit an all-time low of $13.91, with Jefferies earlier lowering its price target to $18 from $22. Put options are active as a result, with one trader possibly rolling their bearish position at the January 2019 15-strike puts down and out to the 12.50-strike puts from the same series.