Fed Day

[oldnemesis]

http://www.bloomberg.com/news/artic...ay-guide?nl=dealbook&emc=edit_dlbkam_20151216

http://www.bloombergview.com/articles/2015-12-16/fed-day-junk-bonds-and-unicorns

http://stockcharts.com/freecharts/perf.php?BND,TLT,LQD

http://stockcharts.com/h-sc/ui?s=tlt

Trade:
With TLT at 121.17
March 126/131 bear call spread for a net credit of $75
Yield = 75/425 = 17.6% in 93 days or 69% annualized
Prob = 70%
Expectation = .7(75) - .15(425) - .15(212) = 52.5 - 63.8 - 31.8 = -43.1

Price................. Profit / Loss............ ROM %
100.00..................... 75.00................ 17.60%
110.00..................... 75.00................ 17.60%
120.00..................... 75.00................ 17.60%
126.00..................... 75.00................ 17.60%
126.75....................... 0.00.................. 0.00%
131.00.................. (425.00)............... -82.40%
134.29.................. (425.00)............... -82.40%
149.02.................. (425.00)............... -82.40%
163.75.................. (425.00)............... -82.40%

Expectation is a little too negative for this trade right now...but it's worth watching.

 

[oldnemesis]

Well the rate change has been announced but is so small as to have no substantial effect.
http://stockcharts.com/h-sc/ui?s=tlt

 

[lawrence-lugar]

Well the rate change has been announced but is so small as to have no substantial effect.

I agree, everyone was making a big deal about this 'historic' Fed rate change day. -- but it wasn't that big of a deal. Kind of like the Star Wars The Force Awakens movie...most people are saying it's just blah.

(all of this is like having great long sex, but barely coming. )