iShares Barclays 20+ Yr Treas Bond
TLT-Q
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It's a great summer play and is now weakening. For the past year it's been consolidating. It could find support, but seasonablity works against it--bonds do well until October, then get out. Why? As on October, risk-on trade takes hold. With rising US rates and risk-on trade, he's no confident that TLT will get a big pop. He's not excited about this.
It's a great summer play and is now weakening. For the past year it's been consolidating. It could find support, but seasonablity works against it--bonds do well until October, then get out. Why? As on October, risk-on trade takes hold. With rising US rates and risk-on trade, he's no confident that TLT will get a big pop. He's not excited about this.
(A Top Pick July 10/17 Up 0.4%) He might have been a little late on acquiring this, he thinks. In 2008, when markets dropped over 40%, this went up 50%. This is the best hedge for the market out there. He does not own it now, instead he owns the 10 year bond equivalent. He expects he will get back into this in the next 12 months.
(A Top Pick July 10/17 Up 0.4%) He might have been a little late on acquiring this, he thinks. In 2008, when markets dropped over 40%, this went up 50%. This is the best hedge for the market out there. He does not own it now, instead he owns the 10 year bond equivalent. He expects he will get back into this in the next 12 months.
(Past Top Pick on June 15, 2017, Up 6%) He'd assumed interest rates would rise. They didn't. Rates rise and the value of TLT goes down. He sold a $126 call and he wanted it to close below that. It closed at $128 instead. He made 6% on the trade because he got more premium when he sold the option than when he would've had to buy it back on the last day of trading (last June).
(Past Top Pick on June 15, 2017, Up 6%) He'd assumed interest rates would rise. They didn't. Rates rise and the value of TLT goes down. He sold a $126 call and he wanted it to close below that. It closed at $128 instead. He made 6% on the trade because he got more premium when he sold the option than when he would've had to buy it back on the last day of trading (last June).
All 3 of his top picks have an element of defensiveness to them. This is the Long Bond in the US and his favourite way to hedge against equity risks. This one is negatively correlated with equity markets. Because it is denominated in US$, Canadian investors have 2 opportunities to make money. 1.) If we see the markets tumble, he expects long dated treasuries to do well because it probably means rates are coming down and there is a flood to safety. 2.) The US$ being the world’s reserve currency, whenever there is uncertainty in the markets, people will flood to the US$ and US treasuries.
All 3 of his top picks have an element of defensiveness to them. This is the Long Bond in the US and his favourite way to hedge against equity risks. This one is negatively correlated with equity markets. Because it is denominated in US$, Canadian investors have 2 opportunities to make money. 1.) If we see the markets tumble, he expects long dated treasuries to do well because it probably means rates are coming down and there is a flood to safety. 2.) The US$ being the world’s reserve currency, whenever there is uncertainty in the markets, people will flood to the US$ and US treasuries.
*Bear Call Spread* Thinks interest rates are going higher. If so, bond prices are going lower. This is the most liquid bond ETF in the US, and has very liquid options. He suggests the sale of December $126 Calls and Buying a December $133 Call. If the stock closes below $126 in December, both options will expire and you keep the net credit of about $2 a share.
*Bear Call Spread* Thinks interest rates are going higher. If so, bond prices are going lower. This is the most liquid bond ETF in the US, and has very liquid options. He suggests the sale of December $126 Calls and Buying a December $133 Call. If the stock closes below $126 in December, both options will expire and you keep the net credit of about $2 a share.
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