NeoButane

USG bond ETF $TLT options, inspired by CryptoHayes

NASDAQ:TLT   Ishares 20+ Year Treasury Bond ETF
Hello. This is my overnight setup for the weekend. I wanted to hold short or open long equities rather than bonds but it's not feasible at the moment.

Unfortunately this is posted after market close, but will serve as a journal for how poorly/fantastically I play it.


A funky strangle, with a 1:1:1 ratio:
  • Mar 19 +140C @ 0.65
  • Mar 19 +135P @ 1.45
  • Apr 16 +100P @ 0.07

Profit zone:
~$133 > x < ~$141

What I am planning:
For TLT to rise rapidly and CryptoHayes to be wrong, letting me roll/close in profit, covering the initial costs of all 3 positions along with profit. This is why i decided to buy the calls closer to the money. If I am wrong on Monday's directional close, I will likely close all 3 positions and take the loss. The expiries are not good.

Mistakes I can point out immediately:
  • I've chosen options too close to expiry
  • I expect movement and have not hedged for no mvement
  • I may have opened too early just to have a position open
  • Personal consumption is on the rise, and that may lead to inflation

    Reason for the Mar 19 140C call: I am very bullish on bonds due to recent news. Stimulus, taxes confirmed not to be reduced. You've got to be mental to think the USG would want to raise rates. Though consumer spending is almost back to previous highs...

    Reason for Mar 19 135P: Maybe it'll go down now. Reflation due to easing of Covid lockdowns.

    Reason for Apr 16 100P: I'm certain this is not how you do it, but it's my "tail risk", cheap hedge in case yield hell breaks loose.

    Better picture because the preview is missing some items:


    % Compare of TLT and 30 year yield

    Personal Consumption

    What's CryptoHayes would have instead recommended: go ape mode on bitcoin , ape mode hedge on bond yields.
Trade active: Wow okay, I really messed up the 140C horizontal line. TIme to call it a day...

Here are the revised lines, looks much better


Trade closed manually: Closed the long call at a slight loss, keeping puts open.

Reasoning:

I reread CryptoHayes' medium article and missed some key points. There is very little upside to being long bonds, and great potential in being short. It would've been best to be long crypto.

'Lack of confidence' in J. Powell's response on inflation/yield control in the short term (lol not a good reason)

JP govt stating they would lessen their buying pressure on their own bonds

Chinese govt stating they would not intervene strongly in their bond market, allowing natural forces to take action

And poor control of COVID-19 and its optics, leading to worse output/economic growth due to continued lockdowns

I'll add links when I can find the sources. The $1.9T stimulus package for the U.S. would increase inflation -> increase bond rates if they're negative, and they are according to the month of Feb's CPI release. From what I understand, the USG would need to continue releasing stimulus packages to keep the equities market going higher due to devaluation of the dollar, or rates will finally catch up and everything suddenly doesn't look amazing.
My published indicators: https://www.tradingview.com/u/NeoButane/#published-scripts

Sorry if I haven't replied to your message yet, I'm a bit backlogged :)

Comments

awesome, thanks for sharing it!

have you considered AMEX:EDV instead of NASDAQ:TLT for this play?
+1 Reply
NeoButane danalec
Interesting! No, I have not. From a quick glance it appears EDV takes more downside but is limited to TLT's upside; looking at its longer term metrics it definitely does net more gains when it's trending up.

Looks a possibly better short-term bear position, as well.

I may consider it now! Do you have any reasons for EDV over TLT?
Reply
danalec NeoButane
@NeoButane ATR on D seemed better for short-term
+1 Reply
I just bought 8/20 150c I think I should've waited a little longer, I also see $130 a short term possibility. Oversold condition not enough, I'd like to see a divergence.
Reply
As someone with 4/16 170c I hope you're right XD
Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar About Chart Features Pricing Refer a friend House Rules Help Center Website & Broker Solutions Widgets Charting Solutions Lightweight Charting Library Blog & News Twitter
Profile Profile Settings Account and Billing Referred friends Coins My Support Tickets Help Center Private Messages Chat Sign Out