Did you know that 900 of the next 1000 US power plants will use natural gas within the next few years?  Domestically produced and readily available to end-users through the existing utility infrastructure, natural gas has also become increasingly popular as an alternative transportation fuel. Natural gas accounts for almost a quarter of United States energy consumption, and the NYMEX Division natural gas future contract is widely used as a national benchmark price. The natural gas futures contract trades in units of 10,000 million British thermal units (mmBtu). 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. Many savvy end users of natural gas use natural gas futures and natural gas options to hedge their price risks related to higher prices.

During the September 11 terrorist attacks the NYMEX was destroyed but within days the natural gas futures and natural gas options markets were trading again. This is a testament to the strength and viability of the energy future markets. The natural gas futures markets are a perfect example of the pure bastion of capitalism that the futures markets represent.

There are many corporate uses for natural gas futures. The spread between the natural gas future contract and electricity future contract– the spark spread – can be used to manage price risk in the power markets and utility plants.

Because of the volatility of natural gas future prices, a vigorous basis market has developed in the pricing relationships between Henry Hub and other important natural gas market centers in the continental United States and Canada. The Exchange makes available for trading a series of basis swap futures contracts that are quoted as price differentials between approximately 30 natural gas futures pricing points and Henry Hub. The basis contracts trade in units of 2,500 mmBtu on the NYMEX ClearPortsm trading platform. Transactions can also be consummated off-Exchange and submitted to the Exchange for clearing via the NYMEX ClearPortsm clearing website as an exchange of natural gas future contracts for physicals or exchange of futures for swaps transaction.

The e-miNYsm natural gas future contract, designed for investment portfolios, is the equivalent of 2,500 mmBtu of natural gas, 50% of the size of a standard natural gas future contract. The natural gas futures contract is available for trading on the Chicago Mercantile Exchange (CME) GLOBEX® electronic trading platform and clears through the New York Mercantile Exchange clearinghouse

Contract Specifications

Henry Hub Natural Gas Future  and Natural Gas Option Contract

Trading Unit
Natural Gas Futures: 10,000 million British thermal units (mmBtu).
Natural Gas options: One NYMEX Division natural gas future contract.

Price Quotation
Natural Gas Futures and Options: Dollars and cents per mmBtu, for example, $2.850 per mmBtu.

Trading Hours
Natural Gas Futures and Options: Open outcry trading is conducted from 10:00 A.M. until 2:30 P.M.
After hours natural gas future trading is conducted via the NYMEX ACCESS® internet-based trading platform beginning at 3:15 P.M. on Mondays through Thursdays and concluding at 9:30 A.M. the following day. On Sundays, the session begins at 7:00 P.M. All times are New York time.

Trading Months
Natural Gas Futures: 72 consecutive months commencing with the next calendar month (for example, on January 2, 2002, trading occurs in all months from February 2002 through January 2008).

Options: 12 consecutive months, plus contracts initially listed 15, 18, 21, 24, 27, 30, 33, 36, 39, 42, 45, 48, 51, 54, 57, 60, 63, 66, 69, and 72 months out on a March, June, September, December cycle.

Minimum Price Fluctuation
Natural Gas Futures and Options: $0.001 (0.1¢) per mmBtu ($10.00 per contract) Therefore a $1 move up or down is equal to $10,000 per natural gas futures contract.

Maximum Daily Price Fluctuation
Natural Gas Futures: $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.

Options: No price limits.

Last Trading Day
Natural Gas Futures: Trading terminates three business days prior to the first calendar day of the delivery month.

Options: Trading terminates at the close of business on the business day immediately preceding the expiration of the underlying futures contract.

Exercise of Options
By a clearing member to the Exchange clearinghouse not later than 5:30 P.M. or 45 minutes after the underlying natural gas future settlement price is posted, whichever is later, on any day up to and including the options expiration.

Option Strike Prices
Twenty strike prices in increments of $0.05 (5¢) 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 (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 natural gas future contract. Strike price boundaries are adjusted according to futures price movements.

Trading Symbols
Futures: NG