Not really an idea,buying the Sept 112 puts today in the range of $177.00
Thanks, Mike!
Any thoughts on the thinking behind it?
Falling interest rates?
Oncoming recession?
Could be a profitable trade!
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Correction to this post as this trade would do best when the news about the economy is positive and interest rates are rising because of inflation(and bond prices falling)......NOT when there's an impending recession.
However, in the 2 weeks left for this option to trade, something crazy could happen to make the market think the economy is actually strengthening and this could result in a spike higher in the price of the Sept 112 put. However, even if the market bounced to the 112 strike price on expiration day, the $177 spent for the put goes bye bye. 100% is gone.
Option expiration often features movement towards a price that has the most open interest.......so that it maximizes the number of puts/calls that expire worthless.........which is the VAST majority of them.
1. 1 month-crashing lower-market expects lower interest rates with upcoming recession
2. 1 year-about to break thru key support from the start of this year
3. 10 years-head and shoulders top-breaking thru the neckline?-headed lower? Some good support in this area.
4. 100 years!-Look at the early 1980s!!! Historically, current rates are not exceptionally high. Compared to the last 15 years, however they've been near the highest here in 2024.
5. Other views welcomed
https://tradingeconomics.com/united-states/government-bond-yield
Spike high on the chart
Makes good sense to me!
Actually, I have to apologize since ive never traded interest rate futures.
your trade assumes interest rates will go higher since interest rates and bond prices go in opposite directions.
a put is an option that gives a trader the right to be short from the strike price.
in this case short the 10 year note Sept 112 strike price
that explains the spike comment, since the spike to lower yields, also featured a spike to a higher price,
thanks for sharing and sorry for my confusion.
for others, if you pay $177 to buy or sell an out of the money option, that’s the most amount of money you can lose, unlike being long or short the futures where the extremely high leveraging means you can make or lose more than 10 times that amount in 1 day.
however, something like 80% of options expire worthless….last I checked over a decade ago.
And options sellers will make you pay up. For instance, if this option expires when the value of it is the same as the strike price……they rake in the entire amount they sold the option at and the buyer is out that amount.
The options buyer needs a move in their favor thats Greater than the amount they paid for the option.
a futures trader makes money from the first tick in their direction……..with all the downside risks.
i used to sell over priced out of the money coffee calls ahead of the freeze season in Brazil in the 1990s ….and always made money as a seller…..But otherwise am no expert.
we appreciate you sharing this idea, mike.
where this Unfolds and Break down from 4122 to 5722 so 4122*1.3886-? and from there ---- and 5722 and minor like 4963 low to High of 5722=AB and from B=5722 dn to C=5442 is 280
1) 78.6% of AB=-??
2) 2.83 time of BC-->>!!
3) 161.8% of ABC ( ELIOTT WAVE)
4) angle and Number of days 196 is 16July and so
5) time = 14 days-- 16 july 30 july==== now next like from there is 8 aug and on 16/19 BIG candles Possible and projections and this On going Unfold on time Line around 23 Dec can be Top or LOw -- wait and Watch Just -- how to break dn in My view 2Cents
Following up more on the Sept 24, 112 puts.
They expire on August 23, 2024. Which is 16 actual days and 12 trading days from now, which is part of the reason they are so cheap. The other part is they are not likely to be in the money when they expire and are currently out of the money.
https://www.barchart.com/futures/quotes/ZN*0/options?futuresOptionsView=merged
Looks like they closed at $250 today. You only had this in for yesterday but if a person kept that bid in, at $177 for the next week+, they will likely get filled.........as the option value marches lower and lower towards ZERO on expiration day, August 23, 2024.
I would actually be more inclined to SELL out of the money 10 year note puts to capture the premium.
However, if the market is hit with a bunch of bullish news about the economy, even if its fake news, the value of these puts could bounce higher in the next 2 weeks.
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I adjusted the initial response with better analysis:
https://www.marketforum.com/forum/topic/106467/#106471
https://www.fincash.com/l/bonds/bond-yields
What is Bond Yield? Bond yield is the amount of return an investor realizes on a bond. Several types of bond yields exist, including nominal yield, which is the interest paid divided by the Face Value of the bond, and current yield, which equals annual Earnings of the bond divided by its current Market price. Additionally, required yield refers to the amount of yield a bond issuer must offer to attract investors.. Read more at: https://www.fincash.com/l/bonds/bond-yields
Definition of Required Yield Required yield is the return a bond must offer in order for the investment to be worthwhile. Required yield is set by the Market and it sets the precedent for how current bond issues will be priced. Requird Yield Details of Required Yield. Read more at: https://www.fincash.com/l/bonds/required-yield
