Long dated options help

[ralph00]

I'll start w/the goal:

I'd like to profit if US long term treasury rates rise substantially sometime in the next 10 years.

The plan:

To buy long-dated (5 to 10 years), well out-of-the-money puts on Treasury futures. Current 10 year rates are about 3.7%. I'd like to buy a put that would be in-the-money should rates rise 300 basis points.

I am not an options trader, but have traded stocks and futures for years.

As I understand it, options on 10 year Treasuries are only available going out a couple of years at most. Once you go out that far, volumes are slim and prices/spreads are very expensive. Are there trading desks out there that would create such an option over the counter for a retail investor? Is there a way to synthetically create such an option using exchange-traded products?

Thanks for any input.

 

[rosy2]

Quote from ralph00:

I'll start w/the goal:

I'd like to profit if US long term treasury rates rise substantially sometime in the next 10 years.

buy TBT , its double inverse of long term treasuries

 

[MTE]

Quote from ralph00:

...Are there trading desks out there that would create such an option over the counter for a retail investor?...

Unless you are talking significant size, I seriously doubt anyone is gonna bother with it.

And there's no way to synthetically create a long term option out of short term ones. You best bet is to buy TBT, as mentioned, or keep rolling short term positions.

 

[ralph00]

Thanks for the help. I actually had just bought some TBT this morning for a less speculative account.

I want to do the way out-of-the-money puts in order to wildly profit from a "black swan" event. The only option quotes I can even get are for Dec 09. While they offer nice leverage (ZN Dec 09 95 puts cost 1/64th), the time decay would be too great.

 

[dagnyt]

Quote from ralph00:

Thanks for the help. I actually had just bought some TBT this morning for a less speculative account.

I want to do the way out-of-the-money puts in order to wildly profit from a "black swan" event. The only option quotes I can even get are for Dec 09. While they offer nice leverage (ZN Dec 09 95 puts cost 1/64th), the time decay would be too great.

Someone may be willing to make a market for a retail customer, but to get any interest you must do SIZE.

If you want to buy a huge number, start by asking your broker to send an inquiry to the exchange floor where treasury puts trade. They may be willing to create a FLEX option for you.

Mark