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Jim Strugger's iShares Barclays 20+ Yr Treas.Bond ETF Trade

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Speaking on Bloomberg Markets, Jim Strugger of MKM Holdings revealed that he wants to take a short position in iShares Barclays 20+ Yr Treas.Bond (ETF) (NASDAQ: TLT).

He said that inflation expectations are rising and he believes that yields can move up, which would cause a decline in iShares Barclays 20+ Yr Treas.Bond (ETF). Strugger thinks the ETF could drop 10 percent and he wants to use a risk reversal strategy to initiate a bearish position.

He wants to sell the June 126 call, buy the June 117 put and sell the June 110 put for a total cost of $0.80. The trade breaks even at $116.20 or 2.64 percent below the current market price and it can maximally make a profit of $6.20. If iShares Barclays 20+ Yr Treas.Bond (ETF) trades between $117 and $126, Strugger is going to lose the premium and if it closes above $126, he is going to have to sell the stock at $126.

 

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Posted-In: Bloomberg Markets Jim StruggerOptions Markets Media ETFs