TBT long play
- Thread starter syswizard
- Start date
I've been reading how they (Governments) will "inflate" their way out of debt alot lately, and I can only presume higher inflation will not happen without higher Treasuries ~
I put on 3x TBT call spreads yesterday for Sept 12 + Jan 13 + Jan 14 with wide strikes and just in case I'm wrong again and treasuries go down to 1.50 or something crazy I also put on a TLT 125-130 Jan 13 call spread.
If TLT is over 130 next Jan - I will come out just ahead and if TBT goes up from here til end of the year I'll make um alot.
The whole Operation Twist thing has screwed things up and when that ends in June we might see a huge jump in longer dated Treasuries.
Not putting on that TLT spread was the mistake I made last year ... and I lost alot on TBT, and if somehow Treasuries stay flat around 2.00 I will get screwed on both ends, but I don't think that will happen.
When May expiration is over I might take a flier on July (& maybe Aug if July doesn't work) OTM calls
You just can't have TLT and SPY at their highs together ~ they should be inversely correlated - just look at the TLT chart and you'll see when Operation Twist was talked about and then announced.
Higher long term interest rates won't be good for bond funds ...
ps I nailed TPX last week and just now FOSL is down 30$ in pre-market (I'm long puts on both and just had to brag - it's too early to be screaming in the house or calling my buds on the phone... the wifey would not be happy about that ... lol)
I put on 3x TBT call spreads yesterday for Sept 12 + Jan 13 + Jan 14 with wide strikes and just in case I'm wrong again and treasuries go down to 1.50 or something crazy I also put on a TLT 125-130 Jan 13 call spread.
If TLT is over 130 next Jan - I will come out just ahead and if TBT goes up from here til end of the year I'll make um alot.
The whole Operation Twist thing has screwed things up and when that ends in June we might see a huge jump in longer dated Treasuries.
Not putting on that TLT spread was the mistake I made last year ... and I lost alot on TBT, and if somehow Treasuries stay flat around 2.00 I will get screwed on both ends, but I don't think that will happen.
When May expiration is over I might take a flier on July (& maybe Aug if July doesn't work) OTM calls
You just can't have TLT and SPY at their highs together ~ they should be inversely correlated - just look at the TLT chart and you'll see when Operation Twist was talked about and then announced.
Higher long term interest rates won't be good for bond funds ...
ps I nailed TPX last week and just now FOSL is down 30$ in pre-market (I'm long puts on both and just had to brag - it's too early to be screaming in the house or calling my buds on the phone... the wifey would not be happy about that ... lol)
Nice leaf ! And right you are.....TBT should be following the S&P 500, but operation twist has thrown a monkey wrench in that correlation.
You have excellent short ideas...much better than CSTR which just refuses to crater. It will eventually....probably right after my put options expire
You have excellent short ideas...much better than CSTR which just refuses to crater. It will eventually....probably right after my put options expire
Imagine you owed someone 14TRILLION dollars ...
Would you rather pay it back at 2% or 4% ? and you get to choose not the lender ~
Now I don't know how much that 14T the Fed has locked up at super low interest rates since Sept 2011 ...
But I'd wager that we're going to see re-vamped debt numbers which will show lower debt in say 10 years then say a year ago and it will be highly touted as "we're cutting down the debt" ~
And sometime in the next few years someone will realize that the debt we need to turnover in 10-20 years will be at a much higher interest rate, and those debt numbers will skyrocket.
I also think if the Fed wanted Treasuries at 1% or 1.5% then that's where we would have been at the start of 2012.
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It's hard getting the right put strike at the right duration, but the market is different now ~ stocks go up to extremes and then down to extremes. HFT is running the show and it's all one way or the other way - machines don't care about valuations/PE/etc or whether they are long or short as long as they're pushing in the right direction.
Look at FOSL today - down 38% on a barely missed number ? That's just ridiculous BUT is it anymore absurd then FOSL going from 80-140 in 4 months ?
FOSL opened at 90 and then kept plummeting down to 75.50 ? That is not how stocks that tank used to work pre-HFT - you'd get your BOOM open but then you'd see flat to up as MM's would control the situation, but that didn't happen today.
I try to buy OTM puts 6-9 months out on stocks that I think are REALLY REALLY over-valued, and there are alot of them right now.
Off top of my head AAP, ACAT, AZO, ORLY, PCLN, ROST, ~
Some of my other puts have come in CAB, CLMT, & SCSS which came down after TPX bombed.
PCLN (35B) is worth MORE then ALL the airline stocks COMBINED ? oh ya I think I've seen that movie before and I know how it ends... with alot of crying.
Auto Parts is the next coffee - you heard it here first ! (Look at charts of AAP, AZO, & ORLY they defy gravity !)
On other end of spectrum we have US coal stocks which are all pricing in bankruptcy ... I mean heck we're not going to need electricity in the future, right ?
If somehow Romney wins ... I will retire when coal stocks go bonkers in 2013 ~
Another compare:
PCLN market cap of 35B is worth more then the entire US Coal AND CCJ AND FSLR combined. ACI+BTU+ANR+WLT+PCX+JRCC+CNX (25B) and FSLR (2B) and CCJ (9B) = 36B... you finally beat PCLN's market cap of 35B.
ps I understand market cap and enterprise value and sure coal companies have alot of debt, but come on they can't all go bankrupt.... unless aliens come down and give us the secret to harnessing dark matter energy ... I just can't see how coal stocks don't rebound sharply at some point (50-100% upside IMO)
I've got alot of call spreads working and I only have to be correct about 1:4 times to break even and I've got alot of time on my side with Jan 13/14 leaps.
/rant off - lol
Would you rather pay it back at 2% or 4% ? and you get to choose not the lender ~
Now I don't know how much that 14T the Fed has locked up at super low interest rates since Sept 2011 ...
But I'd wager that we're going to see re-vamped debt numbers which will show lower debt in say 10 years then say a year ago and it will be highly touted as "we're cutting down the debt" ~
And sometime in the next few years someone will realize that the debt we need to turnover in 10-20 years will be at a much higher interest rate, and those debt numbers will skyrocket.
I also think if the Fed wanted Treasuries at 1% or 1.5% then that's where we would have been at the start of 2012.
-------------
It's hard getting the right put strike at the right duration, but the market is different now ~ stocks go up to extremes and then down to extremes. HFT is running the show and it's all one way or the other way - machines don't care about valuations/PE/etc or whether they are long or short as long as they're pushing in the right direction.
Look at FOSL today - down 38% on a barely missed number ? That's just ridiculous BUT is it anymore absurd then FOSL going from 80-140 in 4 months ?
FOSL opened at 90 and then kept plummeting down to 75.50 ? That is not how stocks that tank used to work pre-HFT - you'd get your BOOM open but then you'd see flat to up as MM's would control the situation, but that didn't happen today.
I try to buy OTM puts 6-9 months out on stocks that I think are REALLY REALLY over-valued, and there are alot of them right now.
Off top of my head AAP, ACAT, AZO, ORLY, PCLN, ROST, ~
Some of my other puts have come in CAB, CLMT, & SCSS which came down after TPX bombed.
PCLN (35B) is worth MORE then ALL the airline stocks COMBINED ? oh ya I think I've seen that movie before and I know how it ends... with alot of crying.
Auto Parts is the next coffee - you heard it here first ! (Look at charts of AAP, AZO, & ORLY they defy gravity !)
On other end of spectrum we have US coal stocks which are all pricing in bankruptcy ... I mean heck we're not going to need electricity in the future, right ?
If somehow Romney wins ... I will retire when coal stocks go bonkers in 2013 ~
Another compare:
PCLN market cap of 35B is worth more then the entire US Coal AND CCJ AND FSLR combined. ACI+BTU+ANR+WLT+PCX+JRCC+CNX (25B) and FSLR (2B) and CCJ (9B) = 36B... you finally beat PCLN's market cap of 35B.
ps I understand market cap and enterprise value and sure coal companies have alot of debt, but come on they can't all go bankrupt.... unless aliens come down and give us the secret to harnessing dark matter energy ... I just can't see how coal stocks don't rebound sharply at some point (50-100% upside IMO)
I've got alot of call spreads working and I only have to be correct about 1:4 times to break even and I've got alot of time on my side with Jan 13/14 leaps.
/rant off - lol
Leaf - congrats on the FOSL. Can I ask you ... who tipped you off ? I never even heard of them before. What a great strat....buying cheap puts before earnings.
I met a trader who did the opposite and sold an Iron Condor in GOOG before earnings. Lost his shirt.
That was dumb.
Good trading is all about avoiding the obviously "dumb" trades.
I met a trader who did the opposite and sold an Iron Condor in GOOG before earnings. Lost his shirt.
That was dumb.
Good trading is all about avoiding the obviously "dumb" trades.
take a look at this SPY/TLT chart, got the idea from a guy on stockcharts
http://stockcharts.com/h-sc/ui?s=SPY:TLT&p=D&yr=3&mn=0&dy=0&id=p06939875656
http://stockcharts.com/h-sc/ui?s=SPY:TLT&p=D&yr=3&mn=0&dy=0&id=p06939875656
I wasn't tipped off about TPX or FOSL and the puts I bought were not cheap (unfortunately), but I did make 150-200% on them. The FOSL was a Sept Put bought in middle of March. FOSL also had a pretty big double top.
To find over-priced stocks I look at articles on stocks at 52-week highs and scan for stocks over 70-RSI. I just look at charts, insider trading and fundamentals of a stock.
I tend not to do well with short duration puts and they get priced up before earnings which makes them not such a great deal. I'd rather own something longer out so I have more time to be right... it's pretty hard to watch AZO go from 360-390 but I still have several months...
And alot of things can go wrong between now and then - Europe is a problem and Greece will NEVER EVER EVER be able to pay back their loans. The only way out is for them to leave the Euro - it's not a matter of if but when. The S&P 500 companies do about half their revenues in Europe - how can that be good for the SPY when most of those countries are in Recession and some are really in a Depression despite the official numbers.
TPX was 7$ 3 years ago - then it was 85$ - then a month later it is 46$ - that makes sense to anyone ?
I wish I could be a momentum guy, and buy those stocks on the way up but that's just not me - I am a value stock guy and buy things on the cheap and wait for them to go up.
I picked up puts on SHW, ORLY and TJX yesterday. IV is low on all 3, so they are "cheap".
Look at the SHW chart - seriously ? Look at the value of insider trading for any of those stocks over the last 2 years.
http://www.j3sg.com/Reports/Stock-Insider/Generate.php?DV=yes&tickerLookUp=shw&Submit232=GO
To find over-priced stocks I look at articles on stocks at 52-week highs and scan for stocks over 70-RSI. I just look at charts, insider trading and fundamentals of a stock.
I tend not to do well with short duration puts and they get priced up before earnings which makes them not such a great deal. I'd rather own something longer out so I have more time to be right... it's pretty hard to watch AZO go from 360-390 but I still have several months...
And alot of things can go wrong between now and then - Europe is a problem and Greece will NEVER EVER EVER be able to pay back their loans. The only way out is for them to leave the Euro - it's not a matter of if but when. The S&P 500 companies do about half their revenues in Europe - how can that be good for the SPY when most of those countries are in Recession and some are really in a Depression despite the official numbers.
TPX was 7$ 3 years ago - then it was 85$ - then a month later it is 46$ - that makes sense to anyone ?
I wish I could be a momentum guy, and buy those stocks on the way up but that's just not me - I am a value stock guy and buy things on the cheap and wait for them to go up.
I picked up puts on SHW, ORLY and TJX yesterday. IV is low on all 3, so they are "cheap".
Look at the SHW chart - seriously ? Look at the value of insider trading for any of those stocks over the last 2 years.
http://www.j3sg.com/Reports/Stock-Insider/Generate.php?DV=yes&tickerLookUp=shw&Submit232=GO
I think it's too hard to predict anything on a week to week basis. (Meaning I've tried and failed.)
Machines are in control IMO, and they can push individual stocks & some ETFs anywhere they want - I'm not a hedge fund with massive liquidity - it's my money not someone else's money ~
The only options I trade short term are naked puts which I write 1-2 months out on stocks & since Oct I've done very well with almost no assignments (or losses more then 100$) except EK and AMR both of which I didn't think would go bankrupt.
I need 4.00 to break even on NOK - I have faith in MSFT and I think AAPL is facing huge headwinds as carriers (not if but when) reduce their subsidizing of i-Phones which will make other phones more appealing. Bigger upgrade fee or reduction in subsidies - pick one - it will happen.
Machines are in control IMO, and they can push individual stocks & some ETFs anywhere they want - I'm not a hedge fund with massive liquidity - it's my money not someone else's money ~
The only options I trade short term are naked puts which I write 1-2 months out on stocks & since Oct I've done very well with almost no assignments (or losses more then 100$) except EK and AMR both of which I didn't think would go bankrupt.
I need 4.00 to break even on NOK - I have faith in MSFT and I think AAPL is facing huge headwinds as carriers (not if but when) reduce their subsidizing of i-Phones which will make other phones more appealing. Bigger upgrade fee or reduction in subsidies - pick one - it will happen.