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  • Don't Fight The Fed, Buy TLT 0 comments
    May 21, 2013 12:37 PM | about stocks: TLT

    Long Treasury Bond Trade

    Let's take a look at the chart:

    (click to enlarge)

    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
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