Natural Gas Option Skew Signals Bullish Bias

The natural gas options market is continuing to provide asymmetrical upside for natural gas producers for the next four seasons. Producers with additional hedging to do in 2026 and 2027 should evaluate collars before swaps. Cost conscious consumers may want to get more aggressive by purchasing swaps.

Over the past year, producers hedging through AEGIS Markets have preferred swaps to collars at nearly 2:1. Below is the hedge activity by producers throughout the past twelve months. Swaps have consistently been the preferred structure for producers to protect revenue against weakening prices.

However, the options market remains in call skew. This is interpreted as market participants placing bets that price is more likely to move higher rather than lower. This bias does fit with AEGIS’ bullish call on the curve as fundamentals look positive for natural gas in the next 12-18 months. The charts below analyze the skew of the 25-delta call option vs. the 25-delta put option. A value above the zero line indicates the call option is more valuable than the put option. These charts are rolling seasonal charts and not a full history of a specific tenor.

*In the chart above, Summer 1 is currently Apr26-Oct26

*Prices as of the close on 10/27/25

*In the chart above, Winter 1 is currently Nov26-Mar27

*Prices as of the close on 10/27/25

It’s worth noting that while winter strips, Nov-Mar, typically remain in call skew the summer strip, Apr-Oct, routinely moves into put skew. The current call skew throughout the summer months provides opportunities for producers to capture some of this extrinsic value when selling call options as part of a collar structure. With summer Henry Hub prices in the upper $3.00s and skew favoring calls, producers should first look to utilize collars for new hedges.