As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(TLT)
Buy the iShares Barclay 20+ Year Treasury Bond Fund (TLT) July, 2014 $116-$119 in-the-money bear put spread at $2.25 or best
Opening Trade
5-19-2014
expiration date: July 18, 2014
Portfolio weighting: 10%
Number of Contracts = 45 contracts
Just a few quick words here.
I think we chewed through a good chunk of our short squeeze with the plunge in yields from 2.60% to 2.48%. Even if the bond market continues to grind up, it is going to be a low volume slog. These strikes give you a break even in the position of 2.38% in yield terms, the old all time low.
We only need one bad day in the bond market to make the bulk of your profit in this trade. If you can?t do options, then buy the (TBT) for a couple of points in the short term, and a double for the long term.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don?t execute the legs individually or you will end up losing much of your profit. Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 45 July, 2014 (TLT) $119 puts at?????$6.75
Sell short 45 July, 2014 (TLT) $116 puts at..??.$4.50
Net Cost:??????????????????.....$2.25
Potential Profit: $3.00 - $2.25 = $0.75
(45 X 100 X $0.75) = $3,375 or 3.38% profit for the notional $100,000 portfolio.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(FXY)
Buy the Currency Shares Japanese Yen Trust (FXY) July, 2014 $98-$101 in-the-money bear put spread at $2.65 or best
Opening Trade
5-19-2014
expiration date: July 18, 2014
Portfolio weighting: 10%
Number of Contracts = 38 contracts
?Oh, how I despise the yen, let me count the ways.?
I?m sure Shakespeare would have come up with a line of iambic pentameter similar to this if he were a foreign exchange trader. I firmly believe that a short position in the yen should be at the core of any hedged portfolio for the next decade.
To remind you why you hate the currency of the land of the rising sun, I?ll refresh your memory with this short list:
* With the world?s structurally weakest major economy, Japan is certain to be the last country to raise interest rates. Interest rate differentials are the greatest driver of foreign exchange rates.
* This is inciting big hedge funds to borrow yen and sell it to finance longs in every other corner of the financial markets.
* Japan has the world?s worst demographic outlook that assures its problems will only get worse. They?re not making enough Japanese any more.
* The sovereign debt crisis in Europe is prompting investors to scan the horizon for the next troubled country. With gross debt well over a nosebleed 240% of GDP, or 120% when you net out inter agency crossholdings, Japan is at the top of the list.
* The Japanese long bond market, with a yield of only 0.60%, is a disaster waiting to happen.
*You have two willing co-conspirators in this trade, the Ministry of Finance and the Bank of Japan, who will move Mount Fuji if they must to get the yen down and bail out the country?s beleaguered exporters.
When the big turn inevitably comes, we?re going to ?110, then ?120, then ?150. That works out to a price of $200 for the (YCS), which last traded at $62. But it might take a few years to get there.
If you think this is extreme, let me remind you that when I first went to Japan in the early seventies, the yen was trading at ?305, and had just been revalued from the Peace Treaty Dodge line rate of ?360. To me the ?83 I see on my screen today is unbelievable. That would then give you a neat 17-year double top.
If you don?t have options coursing through your veins buy the 2X short yen ETF, the ProShares Ultra Short Yen (YCS), which go up when the yen goes down. Look to grab a double of points for the short term, and a double for the long term.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don?t execute the legs individually or you will end up losing much of your profit. Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 38 July, 2014 (FXY) $101 puts at?????$4.85
Sell short 38 July, 2014 (FXY) $98 puts at..??.$2.20
Net Cost:??????????????????.....$2.65
Potential Profit: $3.00 - $2.65 = $0.35
(38 X 100 X $0.35) = $1,330 or 1.33% profit for the notional $100,000 portfolio.
It?s All Over for the Yen
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(TLT)
Sell the iShares Barclay 20+ Year Treasury Bond Fund (TLT) May, 2014 $113-$116 in-the-money bear put spread at $2.42 or best
Closing
5-2-2014
expiration date: May 16, 2014
Portfolio weighting: 10%
Number of Contracts = 38 contracts
Throw bad news on the market, and if it fails to go down, you buy the heck out of it. That is a valuable lesson that I have learned over the decades, and I think it applies to the Treasury (TLT) bond market today.
The killer April nonfarm payroll bringing in 288,000 jobs should have driven a stake through the heart of the bond market. Even more stunning was the plunge in the headline unemployment rate from 6.7% to 6.3%. We?re almost back to normal again. I thought we were home free on our iShares Barclay 20+ Year Treasury Bond Fund (TLT) May, 2014 $113-$116 in-the-money bear put spread.
And fall it did?.for about 15 minutes. Then news of the White House press conference announcing a further ratcheting up of tensions in the Ukraine triggered one of those rip your face off short covering rallies that have become common this year, taking prices for the (TLT) to new 2014 highs just short of our near short strike at $113.
This is not the weekend I want to go into short of bonds so close to the money. Putin is on a roll and appears to be willing to roll the dice once again. Now, he?s calling for a United Nations Security Council Meeting. Better to talk than shoot, I always say. It?s cheaper.
If there has been another valuable lesson this year, it has been to keep positions small, and stop out of losers fast. So, as much as I hate to, I am pulling the ripcord. ?Markets can remain irrational longer than you remain liquid,? said the great economist and hedge fund trader, John Maynard Keynes. So true, so true.
The goal here is to maintain iron discipline in risk control, and be the last man still standing when trading conditions improve and markets become easy again.
Mind you, yields at these levels make absolutely no sense here. They are predicting that deflation is here to stay. They think that we will remain stuck at a subpar 2% economic growth rate.
They are also forecasting that a stock market correction is imminent. A big dump in stocks here, which is long overdue, could quickly add another couple of points to the (TLT). This is another reason to bail on bonds shorts. That?s also why I just knocked out a (SPY) June $193-$196 put spread.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don?t execute the legs individually or you will end up losing much of your profit.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Sell 38 May, 2014 (TLT) $116 puts at?????$3.50
Buy to cover short 38 May, 2014 (TLT) $113 puts at..??.$1.08
Net Cost:??????????????????.....$2.42
Loss: $2.65 - $2.42 = -$0.23
(38 X 100 X -$0.23) = -$874 or -0.87% loss for the notional $100,000 portfolio.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
Legal Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.