Trade idea
BONDS sell puts on bonds
The speaker believes that rates are going higher, which would lead to lower bond prices. Therefore, selling puts on bonds is a strategy to profit from this expected decline. The speaker also mentions that bonds have underperformed other assets in the long term, suggesting a potential for further underperformance.
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Strategysell puts on bonds
Assetfixed_income
Time horizonshort-term
Entry / triggerif the speaker believes rates are going higher, which implies bonds are going lower
Target / exitnot explicitly stated
Invalidation / stopnot explicitly stated
SpeakerTom Sausnoff
Risks- market risk
- interest rate risk
- liquidity risk
Trade idea
ZB strangle
The speaker suggests selling a strangle when volatility is super high, as seen in ZB due to the recent down move. This strategy is preferred over selling a single put or call when the trader believes the market is oversold. The strangle allows for capturing volatility while skewing the position to benefit from a potential reversal. The speaker also notes that the strangle should be skewed with a closer at-the-money put and an out-of-the-money call to capitalize on the perceived oversold condition.
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Strategystrangle
Assetbond
Time horizonshort-term
Entry / triggerhigh volatility
Invalidation / stopvolatility not reaching super high levels
SpeakerMaria
Risks- volatility not reaching expected levels
- market moving against the strangle
- execution issues during high volatility
Trade idea
Trade idea buying bonds
the bond market has been performing well and the speaker has been long bonds
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Strategybuying bonds
Assetbond
Time horizonshort-term
Entry / triggerbonds moving up
Target / exit104
Invalidation / stopno specific stop mentioned
SpeakerThomas
Trade idea
Bonds put options
The speaker is considering buying put options on bonds if they fall below 113 handle, anticipating a potential rebound. The strategy is based on the belief that a break below 6,000 on the S&P 500 could trigger a flight to quality, pushing bond prices higher. The trade is positioned as a short-term opportunity with a defined risk and reward profile.
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Strategyput options
Assetfixed_income
ExpirationMay
Time horizonshort-term
Entry / triggerBonds fall below 113 handle
Target / exitBonds rise to around 114 handle
Invalidation / stopIf bonds do not fall below 113 handle, the trade is invalid
SpeakerScott
Risks- Market conditions may not support the anticipated rebound
- Interest rate changes could impact bond prices
Trade idea
ZB buying puts
The speaker is considering buying May 112 puts on ZB (likely U.S. Treasury bonds) due to the belief that the market may reach a new low. The speaker acknowledges that the puts have reached nearly their highest level again, indicating a potential for further decline. The speaker is hesitant to execute the trade immediately but is prepared to act after the show, suggesting a strategic wait for confirmation of market conditions.
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Strategybuying puts
Assetbond
ExpirationMay
Time horizonshort-term
Entry / triggercurrent market conditions
Target / exitnearly this high again
Invalidation / stopnot specified
SpeakerThe speaker
Risks- Market may not reach the expected low
- Volatility could lead to unexpected price movements
- Liquidity issues in the options market
Trade idea
ZN selling puts
The speaker is selling June 108 puts in the ZN (10-year Treasury Note) futures contract for approximately 30 ticks. This trade is based on the expectation that the market price will not fall below the strike price of 108, allowing the seller to keep the premium. The trade is considered a short-term opportunity, and the speaker notes that the exact price at the time of writing is not specified, indicating that the trade is based on current market conditions.
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Strategyselling puts
Assetbond
ExpirationJune
Time horizonShort-term
Entry / triggerMarket price at the time of writing
Target / exit30 ticks
Invalidation / stopNot specified
SpeakerSpeaker
Risks- Market price could fall below the strike price, resulting in a loss if the put is exercised.
Trade idea
ZB volatility selling
The trader sold volatility on ZB when IVR was high and observed a decrease in IVR, resulting in a profit. The strategy involves selling volatility when IVR is high and buying back when it decreases. This approach is effective in tracking changes in implied volatility and can be applied to other assets with similar volatility patterns.
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Strategyvolatility selling
Assetbond
Expirationcurrent
Time horizonshort-term
Entry / triggerIVR is high
Target / exitIVR decreases
Invalidation / stopIVR increases
SpeakerTP
Risks- IVR may increase, leading to losses
- market conditions may change rapidly
- trading platform limitations
Trade idea
Bonds hedge
The speaker is long bonds, having bought them last night and sold them out, but still holding short puts. They consider bonds a good hedge, especially given their recent performance as a market leader. The speaker suggests that bonds will indicate the direction of the market, making them a useful indicator for future market movements.
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Strategyhedge
Assetfixed_income
Time horizonshort-term
Entry / triggerBonds have been the leader for the last couple of days
Target / exitNot specified
Invalidation / stopNot specified
SpeakerSpeaker
Risks- Market volatility
- Interest rate changes
- Economic downturn
Trade idea
ZB sell bond puts
The speaker suggests that the bond market is signaling a potential policy shift, such as a Trump put, and that the yield curve is wide, indicating a potential for further movement in the market. The speaker proposes selling bond puts as a trade, with a target of 114 and a stop at the low 114s. The trade is based on the idea that the bond market is acting as a 'bond vigilante' pushing yields down in anticipation of policy changes.
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Strategysell bond puts
Assetbond
Time horizonshort-term
Entry / triggerif the bond market is signaling a potential policy shift, such as a Trump put, and the yield curve is wide
Target / exit114
Invalidation / stopif the bond market does not signal a policy shift or if the yield curve narrows
SpeakerRyan
Risks- The trade is speculative and based on market sentiment rather than concrete data.
- The bond market may not signal a policy shift, leading to a loss on the trade.
- The yield curve may narrow, reducing the potential for a trade outcome.
Trade idea
ZN selling out-of-the-money puts
The speaker is selling out-of-the-money puts on ZN (109 or 108.5) and buying a call spread on 109-110, based on low implied volatility and a directional bias. The trade is expected to profit from the directional movement of the bond market, with a focus on short-term expiration. The strategy is based on the speaker's default approach of using delta ranges and expiration periods.
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Strategyselling out-of-the-money puts
Assetbond
Expiration45 days
Time horizonshort-term
Entry / triggerimplied volatility is low
Target / exitprofit from directional movement
Invalidation / stopif the market moves against the directional bias
SpeakerTom
Structure / legs- put on 109 or 108.5
- call spread on 109-110
Risks- Market moves against the directional bias
- Implied volatility increases
- Liquidity issues in the options market
Trade idea
Bonds put selling
The speaker is shorting the 110 puts on bonds, which are trading around 58. They sold them at 54 and 50, indicating a belief that the market will not move significantly against their short position. The speaker notes that bonds are down 24 ticks, suggesting a potential for the put positions to profit if the market continues to decline. However, the risk of the market moving against the short position is a key consideration.
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Strategyput selling
Assetfixed_income
ExpirationAugust
Time horizonshort-term
Entry / triggermarket down 24 ticks
Target / exit54 and 50
Invalidation / stopmarket moves against the short position
SpeakerScott
Risks- Market reversal
- increased volatility
- unexpected economic events
Trade idea
ZB selling puts
The trader is selling puts on ZB (30-year Treasury bonds) with an August expiration, targeting a strike price of 110. The trade is considered a high probability trade with a break-even point at 109. The trader believes that the market is unlikely to reach the break-even level due to the current economic environment. The trade is designed to collect a premium while limiting downside risk. The trader also mentions similar strategies for ZN (10-year Treasury notes), selling puts at a strike price of 108.5 with a break-even point at 108.
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Strategyselling puts
Assetbond
ExpirationAugust
Time horizonshort-term
Entry / triggercurrent price around 110 handle
Target / exitbreak-even at 109
Invalidation / stopif bonds fall below 109
SpeakerLisa
Structure / legs- August expiration
- strike price of 110
- premium collected
Risks- Market conditions can change rapidly
- Potential for unexpected volatility
- Need for accurate market analysis
Trade idea
ZB yield curve trade
The yield curve trade involves buying long-term bonds (ZB) and selling short-term notes (ZN) to capitalize on the expectation that long-term rates will decline more than short-term rates. This strategy reduces risk by 80% and is structured by buying one ZB and selling two ZN. The trade is based on the belief that the yield curve will invert, with long-term rates falling while short-term rates remain stable. The risk is limited to a few hundred dollars per trade, and the potential reward is the spread between the bond and note prices.
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Strategyyield curve trade
Assetbond
ExpirationJune
Time horizonShort-term (within a few weeks)
Entry / triggerBonds are at a certain level, with expectations of long-term rate decline
Target / exitPrice decline in ZB relative to ZN
Invalidation / stopIf short-term rates rise significantly or long-term rates do not decline
SpeakerMitch
Structure / legs- buy ZB
- sell ZN (two contracts)
Risks- Market volatility
- Unexpected rate movements
- Liquidity issues
Trade idea
Bonds Buy bonds during a rally
The speaker's trade idea involves buying bonds during a rally, as they have shown significant gains. The rally was over two points, reaching above 112, and the speaker took profits from the trade. This indicates a successful strategy of buying bonds during a rally, with a clear entry and exit point.
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StrategyBuy bonds during a rally
AssetFixed Income
Time horizonShort-term (2 weeks)
Entry / triggerBonds are at a low point and show signs of a rally
Target / exitBonds rally over two points
Invalidation / stopIf bonds fail to rally and continue to decline
SpeakerThe speaker
Risks- Market volatility
- Potential for a reversal in the rally
Trade idea
Trade idea buying bonds at 10912
buying bonds at 10912
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Strategybuying bonds at 10912
Assetbond
Entry / triggerbuying bonds at 10912
SpeakerTom Stnaf
Trade idea
Bonds selling puts
The speaker is selling puts on bonds at 112, anticipating a potential price drop to 110. The rationale is based on the current yield levels being the highest in 19 years, suggesting a possible continuation of the downward trend. The risk is limited to the premium paid for the puts, and the trade is considered a hedge against a short position in the broader market. The invalidation level is set at 116, indicating a potential reversal of the trend.
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Strategyselling puts
Assetfixed_income
Expirationunknown
Time horizonshort-term
Entry / triggerbond prices at 110
Target / exit110
Invalidation / stop116
Speakerspeaker
Risks- Market volatility
- Unexpected Fed policy changes
- Interest rate fluctuations
Trade idea
Bonds Shorting June 112 puts
The speaker is short June 112 puts on bonds, having sold them last week when bonds were lower. The rationale is based on the current market conditions and the speaker's assessment of bond prices. The trade idea is to profit from a potential rise in bond prices, with the puts acting as a hedge against downward movement.
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StrategyShorting June 112 puts
AssetFixed Income
ExpirationJune
Time horizonNot explicitly stated
Entry / triggerBonds were four or five ticks lower than current levels
Target / exitNot explicitly stated
Invalidation / stopNot explicitly stated
SpeakerSpeaker
Risks- Market volatility
- Interest rate changes
- Liquidity issues
Trade idea
Bonds buying bonds due to their relative value compared to other instruments
The speaker suggests getting long bonds because they are currently cheaper than other instruments on the board. The 114 puts have some value, and selling them would break even at 113. The speaker believes it will be hard to lower rates without raising them, which would justify a 113 print in bonds. However, the speaker acknowledges that the bond market's movement is unpredictable and that no one can accurately predict it.
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Strategybuying bonds due to their relative value compared to other instruments
Assetfixed_income
Time horizonnot explicitly stated
Entry / triggerwhen bonds are cheaper than other instruments on the board
Target / exitnot explicitly stated
Invalidation / stopnot explicitly stated
Speakerunknown
Risks- Interest rate changes
- Market volatility
- Uncertainty in economic conditions
Q&A
Is it a good time to buy zeros for 20 years at 5.3 compounded interest?
The speaker suggests that buying 20-year zeros at 5.3% is not advisable, as they believe rates are likely to rise, leading to lower bond prices. They also mention that bonds have underperformed other assets in the long term.
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Actionable takeawayAvoid long-term fixed-income investments if interest rates are expected to rise.