1 to 2 years US Treasury Bond ETF...With good option money??

C

Cabin111

Just thinking out loud. Is there one or two out there (with active option money), that has a fair yield and has a small amount of option money connected to it.

Just wondering how I can play US Treasuries if they remain high for the next year or two??

I could just buy 1-2 year treasuries and sell them in 1-2 years for a gain. Would that be simpler that doing the headache of buying a fund, then doing an option?

Doing the buying and option may cost more in fees also...

Has anyone done this? Does it work? Drawbacks...I would need an active option market to make it worthwhile...

Maybe just ladder my bonds...
 
Last edited:
Robert Morse said:
I'm confused. What is your goal? You can get over 5% on a 1 year T-bill with no risk if held to maturity. T-bills can be used for Day trading as they can be margined at 90%. What are you trying to accomplish?
More...


I would like to be engaged to good yields, in case treasuries rose to 6-7% in a year or two. Maybe .3+% US Treasure and 2% option money (minus fees). Doable??

The more I think of it, laddering makes the most sense (simplest)...

I also would be fighting with the big boys and MMs...Not good for a retail investor.

Was thinking (while taking my bath), would the buy back create a CPA's nightmare come tax time. Maybe keep it simple stupid...
 
Last edited:
Cabin111 said:
Just thinking out loud. Is there one or two out there (with active option money), that has a fair yield and has a small amount of option money connected to it.

Just wondering how I can play US Treasuries if they remain high for the next year or two??

I could just buy 1-2 year treasuries and sell them in 1-2 years for a gain. Would that be simpler that doing the headache of buying a fund, then doing an option?

Doing the buying and option may cost more in fees also...

Has anyone done this? Does it work? Drawbacks...I would need an active option market to make it worthwhile...

Maybe just ladder my bonds...
More...

SHY (1-3 year U.S. T-notes)
AUM = $25B
Yield =~5% paid monthly
***Options are thin.

***I hold SGOV, TFLO, USFR but no options.
 
BKR88 said:
SHY (1-3 year U.S. T-notes)
AUM = $25B
Yield =~5% paid monthly
***Options are thin.

***I hold SGOV, TFLO, USFR but no options.
More...

SHY would be the one I would do it with I believe, (if I do it at all). I would bottom fish for the day...Try to get the low. It would have to be a full lot (no odd lots for options). I could just play with it for income. Wait and see if the option gets filled and assigned later.

The MMs could/would capitulate on the buy (PFOF)...But could stand tough, on the option.

Throwing out ideas...See if something sticks!!
 
Last edited:
JP Morgan Chase

CEO Jamie Dimon is warning that interest rates could go up quite a bit further as policymakers face the prospects of elevated inflation and slow growth.

Though Federal Reserve officials have indicated that they are near the end of their rate-hiking cycle, the head of the largest U.S. bank by assets said that may not necessarily be the case.

In fact, Dimon said in an interview with The Times of India that the Fed’s key borrowing rate could rise significantly from its current targeted range of 5.25%-5.5%. He said that when the Fed raised the rate from near zero to 2%, it was “almost no move,” while the increase from there to the current range merely “caught some people off guard.”

“I am not sure if the world is prepared for 7%,” he said, according to a transcript of the interview. “I ask people in business, ‘Are you prepared for something like 7%?’ The worst case is 7% with stagflation. If they are going to have lower volumes and higher rates, there will be stress in the system. We urge our clients to be prepared for that kind of stress.”

To emphasize the point, Dimon referenced Warren Buffett’s much-cited quote, “Only when the tide goes out do you discover who’s been swimming naked.”
 
Why not just buy 1 month t bills on Treasury direct?

You get a higher interest rate and can get out within 1 month of deciding to do so.

Why buy the crappy part of an inverted yield curve?
 
engineering said:
Why not just buy 1 month t bills on Treasury direct?

You get a higher interest rate and can get out within 1 month of deciding to do so.

Why buy the crappy part of an inverted yield curve?
More...

$10,000. maximum for TIPS. It is so much easier to have the money at Schwab or Fidelity...When it matures (at least at Fidelity), it gets swept into a money market fund.

Easy to maintain...
 
Cabin111 said:
$10,000. maximum for TIPS. It is so much easier to have the money at Schwab or Fidelity...When it matures (at least at Fidelity), it gets swept into a money market fund.

Easy to maintain...
More...

Not TIPs. Buy actual 1 month t bills.
Maximum purchase is $10 million dollars for non-competitive bid.
Currently paying 5.54%
Can set to autorepurchase up to 24X

Yield on SHY is 4.97%.
To be fair I do have a little bit in TBLL, but most of my cash on the sidelines is in directly held 1month tbills.
 
Last edited:
You must log in or register to reply here.
Back
Top