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Don't Fight The Fed, Buy TLT

|Includes:iShares 20+ Year Treasury Bond ETF (TLT)

Long Treasury Bond Trade

Let's take a look at the chart:

TLT (top) and TLT Jun 117 Puts on a daily chart (source: Tradestation Securities)

There are three main reasons why I am buying US 30 year treasury bond futures:

  1. Fed interest rate policy is stable and this is reflected in the extremely steep curve
    1. Three weeks of selling have pushed prices to their support levels
      1. I have a clear stop both in the futures and in the options with an attractive risk reward scenario

TLT Trade

Buy Long TLT ( 117.41)

Stop 116.42 ( today's lows)

Target 121 + ( levels from early May)

Reward - 3.60

Risk - 1

Reward/Risk ratio - 3.60

Disclosure: I am long TLT.

Stocks: TLT