Hi, trader198. I hope TLT plunges 'cause I'm long TLT's Gamma, too (actually I just hope it DOES move more than now, because my actual position has a strangle-P&L-profile). But you should consider more carefully what clacy states here: You should explain us why you think that, if the stock markets plunges, TLT should not soar because of the usual fly-to-quality behaviour in such situations. Indeed, I guess unexpected bad news would bring your Put far OTM... don't you think?
I got out all my oct.10 puts yesterday when 1:00 30-T aution, I thought it will drop like 10-t aution the day before. noticed it bounce from the drop, glad I got out, locked some gain. but I still kept 123put (oct.17,next week), I suspect I may be wrong, it may become worthless. heard China is slowing, even in deflation mode. that is aganist my TLT put? another negative thing against my TLT put is the historical dry, food price rally? technically, TLT forms a double top, then it goes down 50EMA, a perfect time to short it. I know technical most time just non-sense.
I would be naked short of TLT just in these cases: 1. strong inflation, then people sell TLT to buy something which yields more than inflation; 2. very strong economic growth, then people buy stocks for dividend yield and commotidies' demand rises; 3. strong greed, i.e. everyone jumps on assets in bubble, like Internet companies in 2000, because everyone sells risk free to buy risk. Otherwise you could consider trading on the slope of the US yield curve: if you think it's gonna flat, you should be short on TLT and long on short maturities.
the bad thing is I even told my wife my analysis, she thought it is good analysis, she bought some puts (124,123 oct.10) in her IRA account too, yesterday I cautioned her about 1:00pm 30-t auction, be prepared to get out if wrong. she did not listen, gald before this purchase, I already told her: whether win/lose, all her fault. from this opening, I suspect all her puts would be worthless. bad!
i suggest you read this.. http://www.bloomberg.com/news/2012-05-30/taleb-says-euro-breakup-not-a-big-deal-as-u-s-scariest.html i've been talking about this extensively with my friends and father etc.. the market is crazy quiet at its highs.. and i don't care what anyone says.. volatility is on its way.. don't be short a bunch of premium with the vix at 15.. the dollar index doesn't look like it has much more upside.. equities, treasuries that are USD dollar dominated are overpriced.. Volatility is so low.. just saying.. these are observations anyone could see..
that makes to much sense... to much.. i like that guy..... you gotta be long gold.. short bonds.. short equities at this point.. and long tons of premium.. don't be a pussy.. i'm long the vixy, TBT... . we are going to see a bit of a dollar exit if you ask me... and i like the way the guy talks about the compounding costs to banks that a rise in interest rates will cost banks alot of money and boom they sell their most liquid assets.. equities! i'll be surprised if that guys predictions don't come out to be true... i hope all this happens before the elections so that Romney gets some more momentum
correct this post, she bought aug.10 puts. too bad. I still kep my 123 put august.17. I strongly belive this week TLT will drop another 5bucks. I like the anlysis here. just as the article pointed out, it broken 50ema, that is one of my reasons I bet on put. plus, it has two tops already. I am not a guy who hold opinion about "too high so to short". I noticed the subtle trend reversal signs, but I do not know the underlying change. try to use fundementals to clarify/beef up my position. bonds is the roughtest to trade, most time, ebb little, then big jump or drop, reverse quickly, just like nothing happened. so I do not trade ZB/ZN, I trade TLT options, just hold on and ignore those annoying whipsaws. the headline today seems Japan slows, china slows, but what I noticed is the stock market seems to build a trend to breakout upside. I think wall street knows something we do not know. this week with heavy economic data, those data may hit bond hard, that is what I think. FED is just doing something insane, against the market, they just wish/hope the rate is zero, even minus! (I want that too, if some one give me money with no cost, I welcome it too) what a great wish/hope! to a trader, that is a NO NO. I do not want to be against FED either if FED is stronger than the market. the sad thing is my wife was burned, she does not want to buy any TLT put option any more. I am planning to add more put.
i'd be careful... your in my opinion right.. but timing could be off... make yourself more room to be wrong is what i always say... The Fed can keep the insanity going for a long time...
here is another take on the econ front.... http://www.telegraph.co.uk/finance/...ecession-is-turning-into-a-life-sentence.html