Natural Gas ETF put trade points to lower prices

*Natural gas ETF option trade suggests significant decline

*UNG put trade could be hedge against downside risk

By Doris Frankel

CHICAGO, June 8 (Reuters) - At least one option player on Monday appeared to be taking a bearish stance on an exchange-traded fund tied to the price of natural gas on the view that its shares will decline significantly by October.

During the session, a block of 130,000 contracts expiring in October at the $14 put strike was likely bought in the United States Natural Gas Index Fund (UNG.P), or UNG, for a premium of $2.45 per contract, option analysts said.

The UNG is an ETF that tracks the price of natural gas through futures and forward contracts. It has been trading in a range despite the recent rebound in other commodities like crude oil and gold.

Volume increased to 150,012 lots in the October $14 put strike and exceeded its open interest by a factor of nearly 13 times at the close, Reuters data show.

"It's a big bearish play on UNG," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Connecticut. "But the question is what is at stake behind the play and whether or not the investor has a bullish underlying position in the fund."

Investors often turn to put options, which allow them to sell the security's shares at a fixed price within a specified time period, to speculate on potential price weakness or to protect a stock position.