treasure TLT

bought some puts in TLT (128,125,123) recently. I have two reasons. fundementally if the stock market crashed, the interest rate gets to rise, so the bond price get to fall. if the economy is not bad as illisioned, actually building strength, the stock market rallies further, the so low rate get to rise, so the treasure get to drop too.


in either way, I figure it will drop. I feel it will drop in those two weeks (this week and next week) to 120under.

technically it is no question it is a sell.

any treasure expert, please do some analysis, is my analysis flawed?

 

why not the TBT?

 

Except the exact opposite will happen if the stock market crashes. Rates go lower as money flows into the safe haven of the US Treasury market which pushes the price of TLT up. Look at what happened in 08-09

 

true.. short bonds seems to me like my long term investment.. thats why i'm long call ratio backspreads on the TBT... enables me the largest room for error

 

when someone's credit score drops, his/her borrowing cost shold be higher. if U.s. goverment (suppose) will go bankrupt, then the rate should be higher.

like late payment of credit card, or morgtage, will demange a persons' credit score. normally he/she can borrow at the ordinary rate, but credit card compony or banks will charge higher rate or well high rate if that person wants to borrow even no one wants to lend him/her.

the most recent stock market crash 198X something, most people's home mortage is at 8%~10%. since I have an old buddy(retired recently), he pays that rate, kind of crazy.

do safe haven really exist? I heard CA government had trouble to pay bil

 

Bill gross predicted that bonds would lose their value and he was wrong and he knows a lot about it because america is the best place to put your money and in the euro crisis and everywhere else in the world seeking a safe haven for their money they bought treasuries

 

We're talking about a stock market crash, not us govt default. us govt is the de facto safe haven

 

As I was saying.... but obviously at this point there is limited upside o being long bonds..

 

I would wait until next week to initiate a bearish TLT play, might get better prices. But, I am inclined to take the downside. No real edge on vol though.

 

look at debt/gdp ratios globally... shows how much US can print money.. We are not anywhere close to hitting a ceiling on printing money or quantitative easing.