iShares 20+ Year Treasury Bond ETF
$0.13 (0.12%) Today
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7 Days Mentions
Winner or loser? Only time will tell. 2021 ends. The figure below shows the annual return rate of investors who are holding the asset all year without trading. If you have adopted an active trading strategy, but the annual return is lower than the benchmark, think about what went wrong?
Winner or loser? Only time will tell. 2021 ends. The figure below shows the annual return rate of investors who are holding the asset all year without trading. If you have adopted an active trading strategy, but the annual return is lower than the benchmark, think about what went wrong?
If I did my math correctly TLT has 22 percent to fall before reaching 2009 lows. 20 yr trades at 3.52 rn so a 4.29 yield? Thinking if it hits there time to unload the boat and do buy/write with OTM calls until I get assigned.
> I won't get too specific but I'm looking at let's say ~15-20 yrs when I expect to be taking some kind of draw from my invstmts. That's within the TLT timeframe, but remember that you will be invested even after you start taking money from your portfolio. > (FA was ultra conservative - as if I were 60, not 2 or 3 decades younger ). Or maybe they were just properly analyzing your risk tolerance, that clearly it's lower than you seem to think. Many people assume a much higher risk tolerance than they actually have. > Both extremes are not right for me, so looking for a strategy somewhere in the middle to fit my time/capital/goal horizon Here is my thoughts: * Define your goals, the more concrete you can be, the better. * Solve the math problem from above. Expect 4-6%/yr real return from stocks and 0-1%/yr real return from bonds. Pick an Asset Allocation(AA) that will meet your goals while staying within your risk tolerance. Once you do this, you are done, sell everything and buy that AA. My math works out with 4%/yr real returns, as that's where I take some risk off of the table. If your math only works with 100% stocks and 6+%/yr real returns, the chances of actually meeting your goals are much lower than mine. Take your risk(s) where they seem prudent and avoid all the risks you are able, if you really want to meet your goals. One example I wrote up is [here](https://deepnote.com/publish/b7be8d06-b84c-4178-b51a-688bef90c100) that shows the math with a 15yr time frame. Good luck!
>So did everyone else, including me. We don't get to set the price really, we can just choose to buy or not. I bought and I'm still buying today, I haven't stopped buying. Over time I'm going to pay an average, reasonable price( I hope). I appreciate the response but I have a feeling that my particular situation started in such poor shape that maybe you're overestimating my and my former FA investment decisions. lol. It's difficult to get a barometer to compare against on reddit bc the anon nature of it brings out two types of comments I find: 1. " You have trouble? That's odd bc I 5x since 2020, how could you not make money in one of the best bull markets and money printing eras of all time? Sucks to be you. " 2. " You're doing it wrong. Eat crayons and go 10x on margin. This is the way" But I'll try again. (The above was not in reference to your helpful comments but rather to the more typical ones I see) Between 2020 - late 2021 I tried building a personal portfolio of stocks and ETFs to kind of see if I could outperform my FA who was severely underperforming the mkt as he managed my ROTH IRA for ~10-15 years. I never really looked much, just sent money regularly. I never lost money but growth was several points below "the market". Then COVID came, everyone now has time and money to play stock mkt investor and ya know, WSB, GME, all that stuff. So while I didn't get involved in that, I did think I could pick stocks - hard to miss when everything was Up Only. But what ended up happening is I churned. Like ALOT. Buying this or that and if it dipped, I emotionally sold, if it zoomed, I bought more. Classic case of FOMO and buy high sell low. But I improved the more I studied and things looked good for a while. But then just before Dec 2021, I bought, oof, so many tops! The coming correction was being talked about and smart money got out quietly and I bought their shares. Up only. lol. So by the time the corrections started in Jan - Feb, I had very high cost basis across the board. Dips came, I thought "cool, average down!". Nope. Didn't realize I was buying into weakness. But I still had hugely outperformed my FA and thought, ok, I can take over my ROTH, tune it up, improve the allocation and diversification. (FA was ultra conservative - as if I were 60, not 2 or 3 decades younger ). So I saw the dips in Feb -Mar as an opportunity to deploy cash sitting in my ROTH into ETFs that I had meticulously chosen to align with my allocation plan. Dips kept dipping, I had no concept of how far it would go. Just kept catching knives. FFWD to present and the ~20% total mkt avg correction almost totally put my ROTH and Taxable accts in the red bc of the high premiums I paid for individual stocks (good picks but bad prices) and the correction just putting all the current investments at a loss. Add the TLT SHY positions that the FA had me in at peak cost basis, and well, everything red. In fact, net net, I only barely beat my former FA. Granted, I only had 18 months vs his 10-15 yrs, but today I can firmly say "had I known 18 months ago what I know now...". I've learned a shit ton, but it's a fraction of what there is to know. I'm aware of my mistakes, I stopped churning so much, stopped trying to time the mkt (except for TLT, I know) , and fully accept I don't know shit and going with a 3 fund Boglehead portfolio 2 years ago would have done me better than all my futile tinkering. The problem is that I don't know really what to do from here. I'm sure a lot of ppl feel that way since there's really no safe plays ATM , at least on a shorter time horizon. Speaking of... I won't get too specific but I'm looking at let's say ~15-20 yrs when I expect to be taking some kind of draw from my invstmts. I'd like to say I won't need to, but in my situation and circumstances I will. I'm making up for many years of lost "time in the market" and hoping to hit a target that's a bit aggressive. I'm starting to think I got too used to the Up Only Money Printer of the last few years and need to accept growth is just gonna be much slower than I anticipated. Maybe TLT isn't right for my time horizon. I dunno. I'm kinda feeling stuck in that I'm bearish and think the worst is still to come for stocks and bonds and everything really and surprise, I don't really know how to navigate my bearish sentiments. I don't like buying now bc I personally think the bottom is still a ways more down, I don't like selling under water positions, and I'm undecided about de-risking in profit positions into cash to sit out a bit cuz I'll prob end up missing discounts. Phew, well I realize this became a tell-all history of my invstmts and went way off topic but somehow it helps to write this shit out to help organize my thoughts. Didn't mean to use this thread and your responses as my jumping point tho! Sorry bout that! Obvs I don't expect anyone to tell me the right thing to do cuz everyone is different with different goals and outlooks. It's just daunting the amount of info I've been absorbing and trying to make sense of. I've been studying and reading finance for the last couple years many hours a week. And it just exposes how much there is to know and why smart money is smart money. I'd be smart too if I had a team of 30 Analysts, quant crunchers and heaps of cheap capital! Suppose I need to find a balance somewhere in between blind DCAing and trying to time mkt. Both extremes are not right for me, so looking for a strategy somewhere in the middle to fit my time/capital/goal horizon. If you or anyone made it this far, hey, thanks for reading. Sorry for the novel I wrote here. Cheers
VTI, PDBC, GLD, IEI, TLT in no particular order. I am still heavy weighted on PDBC for the last 5 months, 50%. I watch the trend of these equities and the effects of economic cycle and decide the weight of each every 1st of the month, or I expect for the whole year that some will be flat, and one or two will be top, so I bet and hedge on them, with money I can afford to lose without affecting my daily life/expenditures/emotions whatsoever. It is more fun than choosing individual stocks, because I know what is happening to the economy without reading people's life/suffering etc. That's just my opinion, not any suggestions.
I am repeating the same things and you are responding with the same criticisms. It's clear bonds aren't some magical investment yielding 50%, no volatility, no risk. ​ >15 years to break even is absurd though? Not really, long duration treasuries are highly sensitive to interest rate changes. If you are investing for a shorter period and are worried about interest hikes, it wouldn't make sense to use TLT. Generally people would use something like TLT to hedge equities, to reduce portfolio volatility. TLT is mostly uncorrelated to equities. Rarely, TLT and stocks go down together at the same time (like in this recent stocks bear market). ​ >So saying "bond investors can just hold on" is not very helpful, everything goes up... eventually. Even equity indicies. Yes, **investing**, is about holding on, not trading around assets repeatedly. Nobody should hold a very long duration bond fund for a short period, that's reckless. ​ As I said about 3 times in my last comment, general advice recommends holding a bond fund with similar durations to your investment period for the exact reasons given above. Yes, there could be a big drop in bond fund NAVs, but as explained this isn't quite as bad for long term returns as one would expect. This was the general point I was trying to make.
NAV of TLT Jan 3 2022 = $144.40 Current NAV TLT = $112.48 Percentage decrease YTD = 22.1% ​ TLT current average YTM: 3.34% 112.48\*(1.0334\^x) = 144.40 0.77895 = 1.0334\^x x = 7.6 **7.6** years to break even - assuming there are no changes in yield curve, interest rates etc. ​ From COVID at NAV $171 x = 12.7 **12.7** years to break even ​ Hence, assuming no changes in yield curve, market, interest rates you break even well before the maturity of a 20y treasury. **It is generally recommended you hold an ETF with a bond duration similar to your investment horizon, so this is to be expected.** If you held TLT for the recommended horizon of around **25 years** (weighted avg. maturity of TLT is 25.85y) assuming you started at Jan 3 and assuming no other changes (yields, interest rates, market conditions, YTM 3.334%): 7.6 years to break even. 25-7.6 = 17.4 $10000\*(1.0334\^17.4) = **$17,712** (**CAGR 2.31%**)
Say I buy $10k of TLT at the beginning of the year at 146.41, Jan 3 2022. How long does it take for me to break even if interest continue rising for 3 years? How does it perform on a real basis if inflation persists (you can model this under various scenarios if you like)?
> Isn't that exactly what happened? Well, maybe not hard this month by itself (~13% isn't small though) but from the peak of SP500 to it's recent low was a >22% crash. Confirming bear trend as well. Naw, this is a minor correction. remember I said the dreaded recession words :) > Tbh, from my total portfolio POV and having the unfortunate luck of a FA who bought many tops in equities, bonds and other at drasticly expensive prices for most of 2021, So did everyone else, including me. We don't get to set the price really, we can just choose to buy or not. I bought and I'm still buying today, I haven't stopped buying. Over time I'm going to pay an average, reasonable price( I hope). > I hear myself saying this and I know how it sounds. Trying to time the market. While I believe that's a bad idea overall, I tend to think it can be ballparked somewhat and at least pick up structure changes. You totally are market timing. :) Some people think like you, and think they can predict the future. I recommend you keep a journal of your predictions of the market, including the structural changes and see how it performs over the next decade. Then decide if you really can predict the future. I bet you wouldn't be able to. Nobody else can either, don't worry. I think overall you have to re-think your time frames. My time frame is at least 50 years(well I hope I live that long anyway). I'm investing until my death bed, and hopefully my beneficiary(I've assigned exactly 1, they get everything) will continue investing the money long after I'm gone. When investing in equities, a decade is the shortest time frame you should think about. When buying long treasuries(TLT) you need to think at least 20 years into the future and realistically more like 30-40 years. So these one year increments are no big deal, this 20% decline is whatever. I'm buying at a 20% discount compared to last year, sweet. But really I'm just buying as I have the money. If I got a lump sum $100k today I'd spend it in line with my Asset Allocation(AA) today all at once, regardless of the price in the market. I'm betting that 20, 30 or 50 years from now when I need to spend some, I'll have made about 4%/yr real return on my money. That's what I need to meet my goals. I'm pretty confident I'm still on track to get that, even with the 20% decline in the first half of this year. This second half of the year may very well get worse. That's OK, I have no control over that. I just keep buying, that's something I have control over.
> Yet I would be earning coupons the entire time which is income, regardless of the price of TLT fund? So it's a fixed income coupon not dependent on TLT price? It depends on how one defines yield and on the fund. A single bond(say a zero coupon treasury) Is exactly as you mentioned, it won't pay any coupons but it has a face value of say $10k. You buy it for some dollar amount under $10k, and whatever that difference is, that's your return(which you get all at once at maturity in the form of the $10k one time payment). Others are coupon bonds(in fact most are) and it's again labelled on the tin when you buy it, if they say we will give you 5% return on a $10k note, you hand over $10k, they give you 5% every year and at the end of the note, they give you back the $10k also. But Bond Funds(like TLT) can calculate yield however in the heck they want, except for one, the [SEC Yield](https://www.bogleheads.org/wiki/SEC_Yield), which is a mandated formula from the SEC. > Though, I'm still finding it really hard to justify that the better move, at least between Jan and July wouldn't have been selling off at 140 and buying back around 100-110 around now. It was a near certainty, and I'd be holding quite a bit more TLT had I traded out of that ~$40 loss from 140 to today. Except what if the stock market also crashed hard? Yes the stock market went down, but not a recession like crash, say 2008/2009 style. We are not yet out of the inflation woods, and a recession might still show up. Hence, holding TLT is still a wise decision. It should also be noted that the NAV on bond funds is entirely made up. It's complete fiction. It's supposed to resemble reality, but nobody really knows if it does. What bond fund managers do is they buy pricing guidance from a company and then they guess at the prices of their bonds based on what those companies think. There is no public market exchange for bonds like there is Equities(NYSE, NASDAQ, etc). Except it should be noted most all govt bonds are done via a public exchange, in the US it's done via an auction @ treasury.gov. But that's only for new issues, secondary sales are private affairs.
Thanks for reply. I'm trying to follow it but there's still some cognitive dissonance going on w me I think. 1. Yes, I hold TLT bc the goal was the diversification against equities. But my thought was that the majority of time the US economy, from an avg person's POV, isn't hanging on every word and policy move of the Fed. This particular time (like only a handful before it) is an outlier where QE broke stuff for the last 2 years and now Fed is rushing to contain our 8 of control inflation. And that led to a painful time where equities, bonds, commodities, REIT are all in "down only" mode. And I'm ok with that, it happens. However, since I'm not a professional (not that it's much of a difference) I'm not trying to guess the market and trade in and out of the above mentioned bc I'd likely end up not invested at the wrong times and no one knows where gonna happen for sure, like today's rally. Except, as I said above, I feel like we were given one freebie to help mitigate losses- The Fed was direct in saying yes, we're going to see hikes, a lot of them, at a minimum of 50bps for the next X months. So, while I understand, I think, what you said about NAV and coupons, it still seems to me that I should have taken the freebie, sold TLT after the first FOMC meeting this year and waited for some pricing stability in a few months, then repurchased something like today. I am still missing something in the sense that if..... Wait. I think I may have just got it. Lol. If one has a long term horizon, esp if intentions are to pass my holdings on to family when I'm gone, that means hypothetically that I'd never sell, and therefore not realize the -20% for example that I'm down as of today. Yet I would be earning coupons the entire time which is income, regardless of the price of TLT fund? So it's a fixed income coupon not dependent on TLT price? Is that correct? If so, should I be taking the coupon payments as cash? Or continue receiving them as shares of TLT for compounding effect? I'll stop here bc need to know whether I may have finally grasped why I shouldn't be so concerned with the Unrealized losses. Though, I'm still finding it really hard to justify that the better move, at least between Jan and July wouldn't have been selling off at 140 and buying back around 100-110 around now. It was a near certainty, and I'd be holding quite a bit more TLT had I traded out of that ~$40 loss from 140 to today. Again sorry for length, I'm really trying to understand this and put it to bed. And yes, it is psychological not easy to see that my ROTH portfolio has only one position that's at a heavy loss and of all things, it's the "safest" thing in the folio, bond fund. But yeah, let's go with the idea that no, I never planned to sell it (except this one swan type of event that happens every decade or so) Thx!
Let me try again, answering your question more directly. > Trying to learn here. If the answer is "you don't know for sure, anything could have happened and you could have sold and then it could have ran away from you" then that's not helpful because while I don't trade or make 50/50 guesses, this had an asymmetric risk/reward probability that I would have been completely fine with the risk. This is the right answer, but you are coming from the wrong perspective. Like I mentioned in the other comment, you are focusing on TLT only, and that's not why you bought it. You bought it for the relationship with equities. Equities could have crashed hard over the past month. Luckily they didn't and the "insurance" of TLT negative correlation wasn't needed, which sucks, because we got hammered in both equities and TLT. But today is a new day, maybe something drastic will happen and the reason we bought TLT will show up. It's basically guaranteed the equities will crash and burn again at some point. It might be tomorrow or it might take 10 years. Either way, patience should reward us, and in the meantime we get to rest easy knowing we have the best (positive return) insurance around for that time AND we get those sweet coupon payments too!
Good question! For the record, my TLT holding is down -19.71% as of the start of trading today. I also own a 3X leveraged TLT fund called TMF, it's currently down -52.90%. I've lost more than 1/2 my investment in TMF. I'm still holding and will almost certainly for the entire rest of my life(hopefully 50+ years left). NAV and bonds are mostly at cross purposes, NAV is mostly meaningless in bond funds. That seems like a crazy statement, but I'm serious. Return for bond funds have nothing to do with NAV. Bond fund returns are almost completely from dividends(called coupons in bond land). NAV is mostly just the relationship between what it's currently paying vs what it will be paying tomorrow. The more it's paying tomorrow relative to what it's paying today, the lower the NAV will be. The more it's paying today compared to tomorrow the higher the NAV will be. In other words, NAV is going down because in 20+ years you are going to make all that money you lost today back(from coupons) in the NAV pricing. There is one more piece to NAV pricing and that's the market sentiment, that is the behavioural economics perspective. When equities crash and burn, everyone panics, sells and buys bonds, causing TLT to go up. This is the reason you say you bought it. You bought it for the crazy swings, that are (hopefully) not related to equities. And that's still proving true today. On the days where rates were not changing much, but equities went down, we saw TLT go up. It's diversification job is still going strong. In this world view, we don't care about TLT return, we care about this relationship, so that when equities crash hard, we have some TLT spare change to buy equities at a big discount. Any extra return from TLT's yield is just icing on the cake. You didn't buy it for NAV or yield, you bought it because it would sell higher then equities when equities crash. > My time horizon isn't 20 years. What is your time horizon? For TLT your time horizon needs to be AT LEAST 20 years, ideally much, much longer. My time horizon is 50+ years I hope. As you can see TLT is a very risky investment for being a government bond fund. Only 1 risk has shown up so far, interest rate risk. There are many, many more risks involved. At least we don't have to worry about default risk!
>You bought TLT FOR the volatility and now that it's shown up, you are worried/panicking. This is exactly why TLT was bought (not by me originally, but why I held it) and ofc the expected volatility which I expected, in my rudimentary understanding, to be generally less volatile and even inverse at times, to equities. But stocks and bonds and everything really, has had a major correction, which I know was expected. TLT seemed to be the one holding I could have confidently eased the pain with by selling and waiting. I'm not panicking. I'm asking a legit question that I have not been able to find an answer for: It's 28 days since your reply (which I thank you for writing) and as expected, FED raised rates, TLT down much more, about -18% total for me. The question is, since we knew a near certainty that rates were going up again, and will continue to, I then know that TLT would be going down. So I'm asking why would one hold (as I did) through that? What benefit is there when given this freebie of info with FED all but guarantee QT and 50-75bps hike? Wouldn't it have made sense if back a month or 2 ago to sell my position, hold the cash while rates get priced in over time, then buy it back when things seem more stable? I know, "timing the market" . But from $140 - $120 I watched it do exactly what we all expected. Inflation still out of control. I didn't sell due to thinking I was missing something. But everything I read and studied sure enough pointed to more pain for bond funds. So, while I'd never try to time the market and enter exit from stocks, this is a once in a decade sort of thing, a freebie like I said. What would be the downside had I sold my position at $120, waited thru the next sure rate hikes to come, then buy it back for a discount? It's in a tax advantaged acct, I have zero capital gains from it (position opened in Jan 22 (for reasons I'm unaware of at this point) so why not? Would have saved me ~$10 x shares held which would have bought me a bigger size going forward. Trying to learn here. If the answer is "you don't know for sure, anything could have happened and you could have sold and then it could have ran away from you" then that's not helpful because while I don't trade or make 50/50 guesses, this had an asymmetric risk/reward probability that I would have been completely fine with the risk. I just feel uninformed to three point where I did nothing bc I couldn't find an answer of pros and cons, while I expressly watched it expectedly go from 140 to 110. My time horizon isn't 20 years. No, I don't plan on needing to liquidate it anytime soon, but it just seems anti-logical to have held. Which actually brings me to the bigger question - how did something like TLT not have a large outflow (or maybe it did) for all the ppl like me who bought shares over the last 8 months or so between 130-150 who were surely going to be underwater (in this one holding at least) and just move into cash for the meantime? Sorry for length. You're right, I'm emotional about this but not because of the losses up or down, but because I don't like not understanding why this wasn't a rational good thought. Thx
I exited TSLA & AMD today, added to TLT @ 114 and ARCH @ 138- Thinking about maybe reducing some exposure on ARCH after Q2 earnings. The volatility is starting to get annoying on this low volume stock and I'm thinking despite my thesis on coal overall, I could put this money to work elsewhere for stronger returns
I sold call spreads on TLT. By selling call spreads I make a profit as long as yields don’t drop too much but I was expecting them to go up. The 10 year rate has mostly priced in the terminal rate of the fed hikes but not quite there yet which makes sense because the rate hikes will be delivered over time. Anyway yields went down since them so I’m losing so far
I didn’t (and still don’t) think oil demand was gonna go lower especially that peak oil consumption season is just starting. For treasuries I actually sold call spreads cuz I think rates have to remain elevated for some time. If TLT ends above 118 on July 8, I lose
I gotchu bro. Let me help you out with your bond knowledge. when it comes to bonds - as yields go up prices go down. It moves as a pivot against the interest it pays. So what you are seeing is a ETF that prices the same way as a bond. What you want to look at is the yield on TLT which is going up and the net assets which are going up.
If you short it, you don’t have to pay the dividend (TLT is 3% and TTT doesn’t have one). If you are long dating calls or puts liquidity isn’t as much of an issue since you’ll have time to get out. I haven’t invested in TLT but did calls on TTT from November to April and did pretty well. TBH I wished I’d exercised the calls instead of closing. TTT seems to be more volatile probably due to liquidity. Either way, good luck to you.
But YTD the return in TLT is like -26%...I suppose in a global risk off scenario you could back this, but wouldn't one have expected different outcome past 6 months? When shorting treasuries is out of favor, shorting equity will also be out of favor.
The TLT 20yr bond short is no longer a sure thing. It is not guaranteed that bond yields continue to rise. Note that this is different than the fed funds rate which is trying to catch up to the moves the bond market has already priced in. I also sadly can’t promote any long positions on this at this time, but that IS going to be a monster play at some point out in the future. Your chance to play this as a “no brainer” was when the 10 yr was 1.75. I say all of this as someone who had the trade of a lifetime shorting TLT with put spreads starting early last fall.
Public information is often priced in already. If everyone knows the information you're looking at, where is the edge? Not saying it's impossible but probably more effective in out of favor value stocks than something like TLT. I'd just caution against having strong conviction. However, selling option spreads is a great way to indulge a directional view if you wish while still having theta working in your favor. Just don't go large thinking it's a sure winner.
Watchlist update * Treasuries seem to be stabilizing a bit, move index is up not insignificantly so theres probably some selloff in another bond market. Short run could see literally anything happen, long run seems to be a continuation of the selloff. * Dollars, Also seem to be stabilizing but very likely to continue trending up especially with the buying pressures on foreign nations for trade and debt servicing. * Equities, popping off. Could go either direction short run. * Commodities: Profit taking in Maise fund and weat. Ukraine situation does not look like it will improve anytime soon. Demand will probably fall as the unemployment rate rises. * Metals: Cper is down and trending down hard. Silver and gold following as well. Guesses: * Short implied volatility or but puts on TLT * Long dollars * Equities, long? * Short agricultural commodities * Puts on metals or short implied volatility.
Watchlist update * Treasuries seem to be stabilizing a bit, move index is up not insignificantly so theres probably some selloff in another bond market. Short run could see literally anything happen, long run seems to be a continuation of the selloff. * Dollars, Also seem to be stabilizing but very likely to continue trending up especially with the buying pressures on foreign nations for trade and debt servicing. * Equities, popping off. Could go either direction short run. * Commodities: Profit taking in CORN and WEAT. Ukraine situation does not look like it will improve anytime soon. Demand will probably fall as the unemployment rate rises. * Metals: Cper is down and trending down hard. Silver and gold following as well. Guesses: * Short implied volatility or but puts on TLT * Long dollars * Equities, long or short implied volatility * Short agricultural commodities * Puts on metals or short implied volatility.
Short Straddle ATM 45 DTE to collect max creadit market neutral Roll @ 21 DTE and recenter Roll untested side for credit to breakeven if breakeven breached TP @ 25% If rolled, keep the original TP target minus credit received for roll(s) Long Straddle ATM 365+ DTE for Buying Power Reduction (BPR) and black swan protection Roll @ 45 DTE and recenter Manage long and short sides separately. Example portfolio Credit from shorts / BPR with no long position (naked short) | BPR with LEAP straddle EEM 320 / 628 | 450 EWW 375 / 905 | 440 EWZ 330 / 563 | 555 FXI 355 / 632 | 455 SLV 167 / 406 | 310 TLT 710 / 2234 | 1305 TQQQ 640 / 1640 | 1085 UNG 530 / 1515 | 965 URA 297 / 377 | 330 UVXY 690 / 1690 | 875 Total Initial Credit = 4414 / with inidial 10590 BPR for nakedshort | 6770 BPR with covered LEAPs EEM 320 / 628 | 450 EWW 375 / 905 | 440 EWZ 330 / 563 | 555 FXI 355 / 632 | 455 SLV 167 / 406 | 310 TLT 710 / 2234 | 1305 TQQQ 640 / 1640 | 1085 UNG 530 / 1515 | 965 URA 297 / 377 | 330 UVXY 690 / 1690 | 875 Total Initial Credit = 4414 / with 10590 BPR if naked short | 6770 BPR with covered LEAPs ​ You get "oh shit" protection but also get to actively manage your shorts. With the larger account size, your BPR could also use portfolio margin. Just don't manage more positions than you can handle, this is not a passive strat.
Yields back up, TLT looking like it's going to roll over to new lows, VIX down marginally despite an absolutely massive green move in equities. But scared to buy puts because the exact same algos that were relentless ly selling everything are now buying every red candle.
By Eurodollar I meant the GE Globex Eurodollar futures contract, which sat for 20 years above 99 (it is the short term rate of dollar deposits in Europe) but now is 96.62, but I also did have a short position in Euro/Dollar FX futures (M6E) and a long in the strange little Dollar/Yen e-micro (M6J) that is reversed priced compared to its big brother so on that one you go long if betting on a strong dollar (and if you win the bet, which I did big time given that then Yen climbed to 134, you get settlement in hard Yen rather than $, which makes IBKR a little uncomfortable), but I left both contracts about 2 weeks ego - both were approaching expiry, and I haven't re-bet and probably won't, although I still think the $ will continue to strengthen. But the BOJ could reverse their crazy zero-interest strategy at any moment and the FX reversal would be massive ... so, risk aversion. On TLT I have have generally been bearish for months, but have been jumping in and out, always short (that is, long puts, typically 3 to 6 weeks out, but bailing before the final 2 weeks to minimize theta loss). I am amazed that TLT options still have not really priced in this inevitable negative momentum that is implicit in any textbook bond formula in a era of the highest inflation seen in lives of most of the members of this subreddit (but, alas, not me). They are mispriced and they continue to be mispriced! I have tracked and priced TLT options for a long, long time - I wrote a good chuck of a textbook chapter about TLT as a great example of a sometimes-predictable traditional true ETF (actually collateralized by what it claims to represent). I am currently long in the July 15 110 Put.
Interesting.. what's your view on TLT? Are you short that too? It seems some try to buy the dip since it fell to 108 last week but I noticed it has difficulty rallying.. I'm short tlt with 50 contracts on not far from the strike. I believe too that the Interest rates will rise over the months but in between these rate hikes and public comments, fears of recession might cause bonds to rally.. it's hard to believe that they have that much more to fall unless the market had not priced in much more tightening after Sept.. whereas the FOMC probably must tighten a lot more in order to get to it's target fed funds rate.. I wonder if we will get a slow steady downtrend like the beginning of the year or whether it will be sideways a lot like end of April to end of may
Do you think that fears of recession and eventually a recession happening will mean a bond rally? Thanks for the info ! Appreciate it. Seems bonds are in a bear market and everyone trying to buy the dip there too or will it fall further? TLT is the biggest ETF of bonds I think and it's 20+ year treasuries
The log growth rate of interest rate products are not likely to be normally distributed, especially now, so any calculation of implied volatility using a model that assume normality is producing a number that is mostly gibberish. I do trade TLT options (in a large position now) but don't trade bonds, but I do trade VIX futures and options and this non-normal condition applies to all VIX products in spades. VIX underlying is hugely skewed so standard options models produce useless statistics. The reasons are different for bonds than they are for the VIX but the warning is still the same.
Well it just went down to $17.6K so... Now is about the time to start DCA ing down. Or just wait in cash. We're not at bottom yet. Recession news has to hit and we need the bad earnings from this quarter to be reported. Bear in mind that hitting bottom doesn't mean were about to recover. That could take years or a decade+. GOOG AMZN AAPL CXW DLTR EWW PRTS PLTR ORCL Bonds will rally when inflation drops. TLT is a good option. After a crash/recession, emerging markets tend to do well first. Then growth companies.
Tinfoil hat time. This means I have zero proof. Don't take any of this as given or true... This drop feels orchestrated The purposeful destruction of that tether, with that initial drop at the perfect time (when it was supposed to prove itself as a hedge) along with bots that all have a similar message in their subreddit It all aligns at the same time and destroys people's confidence in it This could all be a coincidence. These things can happen (see Chernobyl). But there's enough there to wonder about Again, no proof. I don't own any and don't care outside of a general distaste for injustice Here are some tickers (so maybe this one gets through) : QQQ, TLT, HDGE, BTAL, SQQQ, USD
Thank you but TLT ran up yesterday snd Thursday. The way I understand it, treasuries go up when stocks go down because yields go up which is why people take money out out of equities and into TLT. So your explanation puzzles me, and is why i asked why you think that? TLT and stocks cant both go down simultaneously
QT returns matured Treasuries (mostly), notes and mortgage backed securities as cash to the banks. ---reuters: "On June 1st , it will start the process at $47.5 billion a month for the first three months, divided as $30 billion of Treasuries and $17.5 billion of MBS." The start was yesterday with the first maturities returned as cash to the banks and lenders. So this new 47.5B in cash must go somewhere. The reverse repo facility is limited and already sits at 2.2T$. The banks can lend out the cash but with inflation rates at 8+ percent they need higher interest rates that the 0.25% minimum that they used to get away with follow the feds fund rate. So what is left, well it's TLT, sovereign debt or Precious metals.