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TLT

THE WEEK AHEAD: CIEN, TLTEARNINGS CIEN announces earnings on 8/31 (Thursday) before market open. Due to the size of the underlying, I would probably go short straddle or iron fly here, as a short strangle and/or iron condor really don't pay. The Sept 8th 24 short straddle is currently paying a 2.35 credit at the door with break evens wide of the expected move, while the Sept 8th 21/24/24/27 iron fly pays 1.92 with break evens right at the expected. OTHER HIGH RANK/HIGH IMPLIED VOLATILITY PLAYS There are currently no other liquid high rank/high implied volatility individual stocks with >70%/>50% metrics out there I consider worth playing. For example, ANF and UNIT have the right metrics, but I can't seem to get enough premium out of a setup to make a play in either worthwhile. Similarly, there aren't any exchange-traded funds at >70%/>35% rank/implied volatility. LOW RANK/LOW IMPLIED VOLATILITY PLAYS TLT (9/10) has both low rank and lowed implied volatility such that a low volatility strategy might make sense (i.e., calendar or diagonal). The Oct/Dec 40 delta back/same strike front skip month 125 put calendar (say that three times fast) currently costs a 1.31 debit/contract to put on. Given the fact that you generally shoot for 10-20% max out of these, multiples might be required to make it worthwhile ... . VIX I've been waiting for a term structure trade opportunity for months now, but it looks like I'll have to continue doing the same. There aren't any /VX futures that are greater than 16 with 90 days or less to go; the first /VX expiry at greater than 16 is way out in March ... .
NYSE:CIEN
by NaughtyPines
FOUR OPTIONS TRADE IDEAS FOR NEXT WEEK: HTZ, TLT, GLD, AND XOP... , one high implied volatility (HTZ), two low implied volatility (TLT, GLD), and one long-dated bullish assumption oil trade (XOP). High Implied Volatility HTZ "Monied" Covered Call Buy 100 Shares at 16.96 Sell Oct 20th 15 call 13.99 db (your cost basis in the shares) 1.01 max profit if called away at 15 Notes: Roll the short call out for additional cost basis reduction if it doesn't finish at 15 or you can't exit the trade before expiry around that mark. It's only got monthlies, so some patience may be required if you are unable to get your candy right away. An alternative approach would be to sell the 12.5 short put in the Oct 20th expiry (currently trading at .50) and then look to cover (monied or otherwise), if assigned. Low Implied Volatility Both TLT and GLD are in low volatility territory here, so look to deploy low volatility strategies on them ... TLT Sept 15th/Dec 15th 125 put calendar 1.87 db GLD Sept 15th/Dec 15th 121 put calendar 1.63 db Notes: Roll the short put aspect out for duration "as is" on significant decrease in value, and look to exit the trade at 20% max of what you put it on for. Obviously, not "big money" plays, but also not big buying power pigs either ... . Long-Dated Neutral to Bullish Assumption Oil Trade XOP Oct 20th 31 short call/March 16th 21 long call Poor Man's Covered Call 8.06 db Notes: Roll the short call aspect of this setup out for duration and credit to reduce cost basis in the setup and look to exit the trade for 10-20% max of what you put it on for. For a longer duration setup with the potential to reduce cost basis in the entire setup to zero over time, consider the Oct 20th 31 short call, Jan 18th '19 20 long call Poor Man's for a 9.54 db. An alternative instrument to consider which is also oil sensitive is XLE, although a similar setup comes with a heftier "entry fee" -- the Oct 20th 65 short call/Jan 18th '19 50 long call costs 12.29 to put on.
H
by NaughtyPines
1
TRADE IDEA: TLT AUG 18TH 125/OCT 20TH 121 PUT DIAGONALHere, I'm just looking to do some old school inversely correlated action in treasuries to compliment a bullish SPY diagonal I'm working separately. Ordinarily, I'd hedge a bullish SPY setup with a bearish SPY setup (e.g., an iron condor or a double diagonal) but working the call side of SPY is somewhat pesky due to skew, and I'd rather keep things somewhat simple in this low volatility stretch we're enduring here. In this particular case, I'm looking to receive a small net credit for the setup (.08) so that I'm not starting out "in the hole" in terms of reducing cost basis in the back month long (currently worth .88). As with all diagonals, there aren't many metrics to show, since it all depends on what happens during the life of the setup. However, here's what we do know: Max Loss/Buying Power Effect: 3.92/contract Theta: .63 Delta: 9.66 During the life of the setup, look to roll the short put out for additional credit. Ideally, I ordinarily do this when it has lost 50% of its value, although it can naturally also increase in value; in the latter case, I consider rolling the short put away from current price -- again for a credit, particularly since narrowing the spread will decrease setup risk. Look to exit the setup for a debit that is less than total credits received during the life of the setup.
NASDAQ:TLTLong
by NaughtyPines
#US10Y Yield and #Dollar fall as #Fed Hike LoomsIt is almost a sure bet that the Federal Reserve will hike an additional 25 bps during this month's FOMC meeting, but yields aren't playing ball. Despite another notch up on the Fed funds, the dollar continues to unwind a large speculative position that had built up post-election. Pointed out in mid-April , the DXY - then over 100 - wasn't positioned for several key disappointments: --- US macro data remains lackluster as the huge gap between soft/hard data begins to close (i.e. expectations were too high to begin with) --- Inflation expectations, which MacroView correctly predicted, stagnated in by the New Year and rollover shortly thereafter. Commodities began to slump, especially crude oil. --- Geopolitical risk is finally being realized from Brexit to terrorism. U.S. treasuries came into 2017 heavily discounted and have provided key opportunities. --- President Trump has been unable to push through his key legislation that markets expected would aid U.S. growth. --- The Federal Reserve is tightening into an economic slowdown, many see 1930s deja vu. Traders have continued to unwind their massive eurodollar bets, and the 10-year yield has followed in lockstep: Gold has broken a very important downtrend resistance that begin July 2016. This is important because this is when interest rates began its parabolic move into the December 2016 rate hike. This could be unwinding. This said, 10-year yield is down almost 19 percent since the Fed hiked in March, and the z-score is moderately negative. We do not disagree that yield could bump up to 220-25 bps, but it's unlikely that an inflection will occur. Unless both inflation and growth pick-up, expect the 10-year to drop below 200 bps by August.
TVC:US10Y
by MacroView_TrendFlex
US 30yr T-Bonds Ideal EntryEntry plan is based on the US 30yr T-Bonds Topping Pattern . Watching the fib retrace area for a high that would establish the right shoulder within the monthly head and shoulder pattern. Quarterly bull cycle counts point towards a high during Q1 '18 which aligns with the monthly target of February '18. My trading account would welcome an earlier high with open arms but it's entirely up to the market. Ideally I'd be able to hop in around $160-$161 after a rejection of that fib area and then ride the move down to my first target at $128 (2013 low). I'll probably take profit there and then go long back to the neckline of this pattern before the next move down to $89 (2000 major low). We still have awhile before we see price prepare to turn so this is a watch and wait. My target reward:risk ratio is at least 5-6:1, again that depends on what price action appears. I'll publish a more detailed plan as well as my entry if/when that time comes. For more in depth analysis on this trade and others checkout my site, PatsTrades. Link is in my profile status box. Thanks!
UShort
by patrick186
US 30yr T-Bonds Topping PatternThis is my favorite and the cleanest opportunity I have been able to find across all sectors/markets. I've been watching this develop for quite some time now and the evidence for a large sell-off into the future is piling up. The head and shoulder pattern on the quarterly/monthly is one of the best things in that pile. We saw a false break to the upside during 2016 but then sold off hard to close below, forming a very large yearly high-test candle. We stalled at support during Q1 and have since rallied into Q2, establishing the neckline. I'm now waiting for a retest of the fib retrace levels where a right shoulder would ideally form. If that does occur I think we'll see a continuation of this new long-term bearish trend that should head down to the Q4 '13 key low. If the stars align price will then bounce from there to establish a neckline within a much larger head and shoulder pattern with price pulling back to our current neckline and the fib retrace levels which would be sitting right on top of that area. We would then head down to retest the Q1 2000 low. This entire theory could take between 5-10 years to play out but man is it the perfect candidate for the "big cahuna" title... Checkout my website @ patstrades.com for more in-depth analysis on this trade and many others. The link can be found on my profile page in the status bar right below my picture. Thanks for reading!
UShort
by patrick186
OPENING: TLT JUNE 16TH 117/MAY 19TH 119.5 PUT DIAGONALGetting long bonds here via a net credit diagonal that I filled for a .01 credit. For diagonals and calendars, there aren't much in metrics to look at, since how much you make will depend on a wide variety of factors (i.e., IV, underlying price movement, etc.): Theta: 1.02 Delta: 7.24 Notes: The idea here is basically to reduce your cost basis in the long option with the short one. Here, the long cost .50 to contract to put on ... .
NASDAQ:TLTLong
by NaughtyPines
1
Strangle on TLTSold the 118/124 Strangle with 52 days to expiration on TLT for 1.95 credit. Always like to have trades on TLT so even thou the IV rank is low I like to add trades keeping the qty small and will look to diversify with other trades in bonds later on next week. I am basically betting that we are still in a correction and will stay between my 124 calls and 118 puts. Our break even are: 116.05 125.95 With a Probability of profit of 62%. Target is to buy it back at 50% of credit received increasing our probabilities to 75%.
NASDAQ:TLT
by AlexanderGotay
TLT Big Lizard, Neutral to bullish.Selling the 116 Straddle and buying the 118 Call for a total of $2.33 Credit. We have no risk to the upside and we are betting the Rate change is already priced in and if something strange happens and we get a move higher we don't have any risk to the upside. Our break even is at $113.67 That's 2.5% protection move to the downside. Last two times we had a rate change we had a move of 1.6% and 1.7%. With 39 days to expiration, we have a 74% probability to make money in this trade.
NASDAQ:TLT
by AlexanderGotay