Time to start playing these? Long TBT? Short TLT?
LONG TBT will be a monster trade next year…the floor is gonna fall out of treasuries at some point…just have to get a good entry Have had my eye on this trade for a while…
Bill.S.Preston,Esq Wrote: ------------------------------------------------------- > LONG TBT will be a monster trade next year…the > floor is gonna fall out of treasuries at some > point…just have to get a good entry > > Have had my eye on this trade for a while… Are you building a position in there yet or still waiting?
I haven’t entered yet…Im still thinking there will be some more upside… Got some targets where I will begin to add but it wont be before the end of this year Right now I’m net long mkt (barely - mostly cash) as I think we get some kind of xmas rally before another leg down next year…after xmas I will reevaluate and probably go flat… as far as the treasury trade, it may be a while before we see the bottom fall out but I firmly believe that at some point there will be a run for the exits…but this kinda all hinges on how ugly things get after this brief ‘feel good’ period wears off…obama inaguration could be another catalyst for an equity rally too…but once we get that next leg down in equities (sometime in ealry to mid 09) bonds will be the next great short opportunity You have a roadmap laid out?
I really like that idea. I think it will be a great opportunity. They have to revert to thier mean. http://finance.yahoo.com/q/bc?t=1y&s=TBT&l=on&z=m&q=l&c=tlt
I agree - this market is set up for a monster fall. I’ve bought well otm long dated put spreads in small size, and when I feel its time Im going to load the boat. I think one of the ways to play it is to also be short the S&P - that way you filter out a lot of the flight to quality noise and just isolate the issuance / printing money /usd going to hell aspect of the trade.
I think the bond fallout will be well after we get the next leg down in equities…who knows if the next drop result in a bottom but I think we def will test the nov lows in 09…im thinking feb-april range I have a LOT of common shorts picked out that I am going to be scaling into in the beginning of 09…prob play with the options and ultras a little but Im a bit wary of the price actoin on the long/short ultras at the moment…I only use them for short term swing trades at the moment and think that shorting common will be a safer, wiser move I really have a feeling that the bond fallout down the line is gonna blow people’s minds…Im not wishing for it by any means but at this point in time it seems inevitable to me
Bill.S.Preston,Esq Wrote: ------------------------------------------------------- > I think the bond fallout will be well after we get > the next leg down in equities…who knows if the > next drop result in a bottom but I think we def > will test the nov lows in 09…im thinking > feb-april range > > I have a LOT of common shorts picked out that I am > going to be scaling into in the beginning of > 09…prob play with the options and ultras a > little but Im a bit wary of the price actoin on > the long/short ultras at the moment…I only use > them for short term swing trades at the moment and > think that shorting common will be a safer, wiser > move > > I really have a feeling that the bond fallout down > the line is gonna blow people’s minds…Im not > wishing for it by any means but at this point in > time it seems inevitable to me Bill, I agree with your thinking here. Think we rally till year end, possibly end of Jan… and then we start a decline. Also agree with your bond scenario. Do you think it might be wiser to play trade using futures to get some more leverage on it?
Or what do you think about pairing it with TIP?
I dont trade futures at all but if your looking to lever up and not too familiar with the future market (like myself) you could always do options on TLT…they are pretty liquid and bid/ask is not too bad…premiums don’t seem to be too bad way out there The only thing Im worried about with my thesis is that it seems to be an ever crowding boat among traders I talk to…with all the money on the sidelines it wouldn’t take much for a rotation out of bonds to rip equities up…I dont think it’s a probably scenario but it is likely toughest thing right now is to figure out the time frame of these events…I do think equities will puke next year and bonds will follow…but whose to say that big players won’t rip this market north before hand to get as much bang for the move as possible…I guess the only thing small fish like us can do is to scale scale scale GL
you will all be shocked at how low Tbond yields go over the next 1-2 years.
rohufish Wrote: ------------------------------------------------------- > you will all be shocked at how low Tbond yields go > over the next 1-2 years. It’s inevitable that they will come up again.
as long as you can remain solvent in this trade, it may work, but “inevitable” that you speak of can take a long time
I’ve been trying to short TLT for a long time. There are no shares available. The puts are insanely expensive
TBT is “twice the inverse of the daily performance”. Daily, the 2x inverse’s perform as one would expect. Over longer periods of time, the tracking can drift substantially. ProShares warns about this here: http://www.proshares.com/funds/performance/UnderstandingProSharesLongTermPerformance.html If one has been following IYR and its 2x inverse SRS, its not hard to see the slippage. Unless one is in a 401k or some other kind of short-restricted account, shorting TLT would be a better way to go. Although not being able to borrow TLT would be another reason to think about TBT. FWIW, Interactive Brokers has not had any TLT available for the last 10 days. Buying puts and trying to time when (assuming the if part) the bond market crashes is beyond my level of expertise. It could be years. I agree with the notion that it’s going to blow people’s minds when it does occur.
It’s just treasuries… all the other bonds are realistic. I bet when treasuries pop it doesn’t effect the rest of the credit market as much as you’d think. Remember in level 3 they talked about immunization? The idea is that you have a portfolio full of assets to meet some future obligation. If, for whatever reason, that ability to meet the obligation diminishes to a certain point, you have to immunize. Immunize = buy treasuries and lock-in what’s left of the value to guarantee a certain % of the obligation. SO, given the current credit crisis… EVERY single portfolio with that type of restriction/setup is immunizing right now because there’s no credit class that hasn’t crashed. Thus, it’s just like the programmed trading selloff in the 80’s. It’s a bunch of funds that are mindlessly selling low and buying frightfully high. You have to be a moron spending someone else’s money to buy a 30 year bond that yields 3%. Then again, I said that when it yielded 4% so I guess I’m the moron.
i had bought puts on TLT… got out after bernacke mentioned treasury ‘may’ buy long dated treasuries to lower interest rates… i agree it’s a bubble but think it gets much more inflated before it burst… i am one to not get short at the top… but will TRY shorting on the way down…
I was buying puts and put spreads on TLT after big up moves in the long bond this year, ie. after Jerome Kerviel, Bear Stearns, Lehman and the recent ridiculous move due to MBS hedging, immunization and who knows what. The first 3 worked out very well while that last one I quickly exited at a small gain after a day. Puts are very expensive on this thing now and I’m waiting for the prices to come down before trying this one again. I agree with ConvertArb, that the long bond could have some legs here so I’d be reluctant to dive into this one too quickly. As long as the 30 year swap spread is negative, this thing is a bit too speculative for my tastes.
Can someone look at the long bond futures and tell me how that would work as opposed to shorting TLT (which is unavailable for short)?