tag:blogger.com,1999:blog-973587304515257848.post6808506296231793648..comments2024-02-11T00:12:56.047-08:00Comments on IN THE MONEY TRADES: Short Bonds via TLTAnonymoushttp://www.blogger.com/profile/02083421527404780093noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-973587304515257848.post-73439884225509281122010-06-28T11:26:53.604-07:002010-06-28T11:26:53.604-07:00So ironic post here, I just put on a bullish bet o...So ironic post here, I just put on a bullish bet on TLT for August. I am currently short an iron condor for July but since I put that on I got more bearish as well. I think I posted that I liked the short puts leg of that trade better than the calls. Since I am now long a call spread in August, I am going to try and close the July short call spread early if I get the chance. If I lose on the short calls for June then it means I made money on the August, so the loss won't be 100%. I'll do a full post for this new trade after market close.Jason Haashttps://www.blogger.com/profile/08138027111150684908noreply@blogger.comtag:blogger.com,1999:blog-973587304515257848.post-10299516886589600492010-06-28T06:45:04.181-07:002010-06-28T06:45:04.181-07:00So the TLT has bounced and has been pretty strong....So the TLT has bounced and has been pretty strong. It has also entered into an area that I had said I would add to my position. But since writing this post my market bias has flipped from a neutral one to more bearish and I am not sure being short the market and adding more short exposure to bonds makes since. As panic sets into the market and investors flee into bonds causing rates to come lower and bond prices to go higher. <br /><br />I never said this was a risk less trade. I think I may just be a early and is why I started with such a small position. I have not been stopped out of the original trade and will continue to watch this theme as it unfolds and make trades accordingly.Anonymoushttps://www.blogger.com/profile/02083421527404780093noreply@blogger.comtag:blogger.com,1999:blog-973587304515257848.post-80136685427855527082010-06-18T11:26:53.140-07:002010-06-18T11:26:53.140-07:00http://online.barrons.com/article/SB12767315743830...http://online.barrons.com/article/SB127673157438306763.html?mod=BOL_hps_dc<br /><br />If this link doesn't work let me know, I don't know if this was on the free content of Barron's or the paid side. As we discussed on the phone, I think the bigger risk is yield going lower and not actual FED rates increasing. And yields can only go to zero and theoretically can't stay there very long. I wonder what credit call spreads were yielding in 2008 when yields temporarily went to 0% on bonds. If it was a credit of any kind, wouldn't that be free money? If anybody was willing to pay call premium on the ETF once yields hit zero then that would imply they think yields are going to go negative.Anonymoushttps://www.blogger.com/profile/09077115020222496184noreply@blogger.comtag:blogger.com,1999:blog-973587304515257848.post-1160618715255447932010-06-18T11:10:34.209-07:002010-06-18T11:10:34.209-07:00Now this makes sense to me. I agree that rates are...Now this makes sense to me. I agree that rates aren't going to do down, but I think they will stay near zero for quite some time. So I wasn't interested in buying puts or just being short the stock since that would eat buying power and potentially not pay off for a while. So I hadn't revisited this idea but you've given my my answer, selling the call spread instead of owning the put spread or being short the stock makes sense. Your risk is that yields go lower in the short-term, if they did, you roll the call spread out as yields can only go to zero. I think this is a play you keep in mind for the next flight to safety when yields get ridiculously low, assuming yields won't stay low forever you sell the call spread. I might steal this play so I'm giving you credit ahead of time.Anonymoushttps://www.blogger.com/profile/09077115020222496184noreply@blogger.com