Tuesday, September 3, 2013

Like everybody else, going short treasuries, with a untwist

It does not take a genius to assess that the QE taper may increase the yield curve. But markets do not move in a straight line, and often relapse. Thus the movement will be jerky, and pronounced. But with that said, the net effect is a high probability of a trend toward higher rates over a 12 month period. This blog believes obtaining a leveraged return on anticipating a small upward movement is the best way to gain from the "untwisting" of long term rates when the bond purchases subside. The author is long JAN 2015 $100 TLT Puts and short JAN 2015 $95 TLT Puts for a net debit of $2.4.



Interest rates at least short term interest rates have bottomed.

Lockstep said...

This one was just wrong. The Fed stopped buy bonds and the price went up. Who knew?

Selling the position for .10 for a 95% loss on the position.