LD Lossdog Research
strategy

yield curve trade

3 matching records.

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
longFixed Incomelongyield curve tradeZB
high confidenceVerify in video at 28:12 ↗
Trade idea

2-year vs 10-year futures yield curve trade

The speaker suggests a 4:1 ratio of 2-year to 10-year futures contracts as a yield curve trade. This strategy involves using futures contracts to capitalize on the spread between the two instruments. The speaker mentions that the capital required is around $6,000, and the trade is considered low-risk due to the leverage provided by futures. The trade is based on the expectation of a change in the yield curve, and the risk is managed by keeping the position small and using a 4:1 ratio.

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Strategyyield curve trade
Assetfutures
Time horizonShort-term, with a focus on immediate risk
Entry / triggerWhen the yield curve is expected to flatten or invert
Target / exitProfit from the spread between the 2-year and 10-year futures
Invalidation / stopIf the yield curve moves against the trade, leading to a loss
SpeakerSpeaker
Risks
  • Market volatility
  • Leverage risk
  • Incorrect yield curve prediction
pairs tradefuturespairs tradeyield curve trade
high confidenceVerify in video at 28:00 ↗
Trade idea

ZB Yield Curve Trade

This trade is based on the assumption that the yield curve will narrow as long-term rates fall faster than short-term rates. The trade involves buying one ZB contract and selling two ZN contracts, which is a classic yield curve trade. The trade is low risk and low reward, with potential daily movements of a few hundred dollars. The trade requires around $5,000 in capital and is considered a classic yield curve trade.

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StrategyYield Curve Trade
Assetfutures
ExpirationSEP
Time horizonShort-term
Entry / triggerYield curve widening
Target / exitLong-term rates fall faster than short-term rates
Invalidation / stopIf short-term rates fall faster than long-term rates
SpeakerSpeaker
Structure / legs
  • buy ZB
  • sell two ZN
Risks
  • Limited profit potential
  • Capital requirements
  • Market volatility
longfutureslongyield curve tradeZBshort-term
high confidenceVerify in video at 18:45 ↗