Aggressive Inflation Trade

Discussion in 'Options' started by hedgez, Nov 9, 2010.

  1. hedgez


    When a cancer patient is sick, you can pump them full of medicine to mask the underlying problem... similarly, when the economy is about to implode, you can pump it full of stimulis and print a heck of a lot of money to mask the problem. The issue at hand is, what's the consequence of these actions? Furthermore, how long until the medicine stops working? Once the medicine stops working, what's next? More medicine, a cure, or another catastrophe?

    In my opinion, and I'm sure I'm not alone, the economy is heading fast forward into another catastrophe in the form of rampant inflation and steep declines in the dollar.

    So.... how do you take advantage of this crystal ball?

    Do you simply buy LEAPs Puts on TLT?

    Without being an institutional investor what is the MOST AGGRESSIVE option bet to make that within 5 years the 10 year or 30 year Treasury will rise above a certain threshold???

    Any help or advice would be VERY much appreciated!
  2. spike88


    If you are betting on steep declines in the dollar, you could just sell the dollar. You could also buy TBT to play expected higher long-term rates.
  3. Dollar is in a ferocious rise, and you are talking about hedging against inflation.

    I bet you read a lot of newsletters, and hear news on TV.
  4. ferocious rise? it's up 2% in the last few sessions after getting pummeled for weeks, and it's still down over 13% from the highs of the year. there's nothing ferocious about the dollar anymore, except how quickly the world is losing confidence in it.