Friday, October 29, 2010

QE2 expectations are too big:Long USD

The USD is oversold. Reports are leaking that the Treasury bond broker dealers are telling Helicopter Ben that additional Fed purchases of Treasury debt may not be productive. Thus the Fed may buy mortgage debt or just reduce the size of the purchases. In any case, the markets have overestimated the interest of the Fed to push rates down further.

Sell UUP Jan 2011 $23 put at .93
Buy UUP Jan 2011 $22 put at .35

.58 upside with .42 downside with technical trends in your favor.


Lockstep said...

Closed out position.
Bought the $23 put at .12
and holding the $22 put no value
for a 46% return (58 cents - 12 cents).


QE is a big mess.