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Natural Gas Futures Trading Basics
Natural Gas futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of natural gas (eg. 10000 mmbtus) at a predetermined price on a future delivery date.
Natural Gas Futures Exchanges
You can trade Natural Gas futures at New York Mercantile Exchange (NYMEX).
NYMEX Natural Gas futures prices are quoted in dollars and cents per mmBtu and are traded in lot sizes of 10000 mmBtus .
| Exchange & Product Name | Symbol | Contract Size | Initial Margin |
| NYMEX Natural Gas Futures (Price Quotes) | NG | 10000 mmBtus (Full Contract Spec) | USD 8,775 (approx. 16%) (Latest Margin Info) |
Natural Gas Futures Trading
Consumers and producers of natural gas can manage natural gas price risk by purchasing and selling natural gas futures. Natural Gas producers can employ a short hedge to lock in a selling price for the natural gas they produce while businesses that require natural gas can utilize a long hedge to secure a purchase price for the commodity they need.
Natural Gas futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable natural gas price movement. Speculators buy natural gas futures when they believe that natural gas prices will go up. Conversely, they will sell natural gas futures when they think that natural gas prices will fall.
Related Articles
- Buying Natural Gas Futures to Profit from a Rise in Natural Gas Prices
- Selling Natural Gas Futures to Profit from a Fall in Natural Gas Prices
- Natural Gas Options Basics
- Natural Gas Call Option Trading Basics
- Natural Gas Put Option Trading Basics
- Hedging Against Rising Natural Gas Prices with Natural Gas Futures
- Hedging Against Falling Natural Gas Prices with Natural Gas Futures
How to Start Trading Natural Gas Futures
To buy or sell natural gas futures, you need to open a trading account with a broker that handles futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as optionsXpress lets you trade futures and futures options as well. optionsXpress also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.
