TBT long play

Discussion in 'Options' started by syswizard, Jul 23, 2011.

  1. Anyone have an opinion on this one ? One of the call-ins to Options Action this week mentioned this guy. It's very close to all-time lows.
    The play is short put spread.....short 33's, long 31's. (Also, one could go naked a la Vic Niederhoffer !)

    The idea would be that even if the debt ceiling issue is resolved, there is still a chance for an S&P/Moody's downgrade of US debt...thereby raising interest rates.
    Worst case scenario: weaker economy in the next quarter.
  2. TBT's up 2% this morning !
  3. Long TBT 34 weekly call options recommended on Options Action.
  4. That was a loser....weak economy is keeping rates down no matter what.

  5. ....some are calling for 2.5% for the ten year....
  6. Well, it's apparent in this trade that the worst-case scenario has occurred. There is a huge flow of funds out of equities and into bonds.
    However, the questions are: how long will this last; how far can this go ?
  7. Answer: much longer than I can retain my account balance.

    TBT closed Friday at 31.45. Recent low is 29.77.
  8. TBT now in the 30's !!!!
    This is smelling like the last big "fake out" before the "break out".
    I've seen that so many times.
  9. Short TBT! Long TLT! The fed is going to pledge low rates, and they have the power to do it. Growth is at stall speed now, there's no catalyst for higher rates. A downgrade would actually make rates fall, because it would change the risk free rate of all asset classes globally, huge flight to safety.
  10. TBT hit a new 52 week low today !!!
    This implies QE3 is coming very soon to a town near you.
    #10     Aug 2, 2011