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About Me: I reside in New Jersey with my wife and my two dogs. I have a B.S. degree in Accounting with a minor in Finance, as well as an MBA in Accounting. Currently, I am employed as a forensic accountant, and am pursuing my CPA designation. I love the stock market, and picking stocks. I spend... More
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  • Today's Newest Trade 0 comments
    Dec 29, 2010 10:53 PM

    This morning I purchased one June 2011 TBT $35/$47 CALL spread for $4.65 (x100 shares = $465) to supplement the (38) shares of TBT that I am currently holding in the portfolio. My cash position in the portfolio is now $781.42, down from $1,246.42 after the purchase.

    I have been saying for quite some time that I believe interest rates will continue to rise, especially with Mr. Bernanke's QE2 which is scheduled to purchase near-dated bonds through June of next year (notice the date I picked on the options).  While TBT has made an impressive move upward since the announcement of QE2, I believe it has a long way to go.  I purchased the (38) shares of TBT currently sitting in my portfolio on 1/3/2010, the date I started this blog.  Back then, the yield on the 10-year was 3.85%, and the TBT was trading at $43.66.  Today, the 10-year closed at 3.35%, down .132%, and the TBT closed at $37.81, down 3.30% today.  Obviously, I took a bit of a hit on the aforementioned trade today.

    To put this all into a bit of historical perspective, the average 10-year rate from 1962 to the present (a pretty big sample size) is 6.81%.  Furthermore, the average rate from 2000-2009 was 4.46%.  You can download and analyze all of this data for yourself here

    Just to tie a pretty little bow on this whole conversation, not only are the historical rates still low, but the U.S. Government itself has already told us it is going to prop up rates through QE2, and we there are also other forces at work which may drive rates up (see my post from yesterday here, more specifically, China and oil).  As inflation begins to creep into the economy, and I am not saying it will, so too will the interest rates increase.  Actually, just the fear of inflation is all that's needed.

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  • June $TBT $35/$48 call spreads. Feds are going to buy through June, and long rates will continue to rise.
    Dec 28, 2010
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    Dec 19, 2010
  • Deep in-in-the-money SPY December calls. Want to leverage the big market run through the end of the year.
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