Natural gas prices, as the reader is very likely aware of, have been on quite a tear in the last couple of months, reaching their highest levels since the Fall 2018 rally, having broken out of the recent "consolidation" range this week, sending the prompt month August contract closer to the $4.00 level.

The move higher has led to an increase in day-to-day volatility, and some rather wide daily trading ranges over the last month.

When playing flat price, i.e. being outright "long" or "short", profits can be significant if the trader is able to capture the right move, but risk of loss is also significant when prices are moving around in wider ranges. One way to mitigate risk is through the use of options and spreads. In our Wednesday Seasonal Trader Report, available for all Trader level subscribers, we provide the trader with some strategies that, assuming our read on weather and fundamentals is correct, can secure a profit with less risk involved compared to an outright position. As an example, this is from our report last week:

All of these strategies were skewed in the bullish direction, but by using options and spreads, one can limit the risk involved, and in some cases, such as with covered calls, can still turn in a profit even if flat price moves somewhat against the prevailing view. In this case, all four trade ideas proposed are in the money.