Fed Day

Discussion in 'Options' started by oldnemesis, Dec 16, 2015.

  1. http://www.bloomberg.com/news/artic...ay-guide?nl=dealbook&emc=edit_dlbkam_20151216

    http://www.bloombergview.com/articles/2015-12-16/fed-day-junk-bonds-and-unicorns

    http://stockcharts.com/freecharts/perf.php?BND,TLT,LQD

    http://stockcharts.com/h-sc/ui?s=tlt

    Trade:
    With TLT at 121.17
    March 126/131 bear call spread for a net credit of $75
    Yield = 75/425 = 17.6% in 93 days or 69% annualized
    Prob = 70%
    Expectation = .7(75) - .15(425) - .15(212) = 52.5 - 63.8 - 31.8 = -43.1

    Price................. Profit / Loss............ ROM %
    100.00..................... 75.00................ 17.60%
    110.00..................... 75.00................ 17.60%
    120.00..................... 75.00................ 17.60%
    126.00..................... 75.00................ 17.60%
    126.75....................... 0.00.................. 0.00%
    131.00.................. (425.00)............... -82.40%
    134.29.................. (425.00)............... -82.40%
    149.02.................. (425.00)............... -82.40%
    163.75.................. (425.00)............... -82.40%

    Expectation is a little too negative for this trade right now...but it's worth watching.
     
  2. I agree, everyone was making a big deal about this 'historic' Fed rate change day. o_O -- but it wasn't that big of a deal. Kind of like the Star Wars The Force Awakens movie...most people are saying it's just blah.

    (all of this is like having great long sex, but barely coming.:confused: )