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Dan Nathan's iShares Barclays 20+ Yr Treas.Bond (ETF) Trade

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On CNBC's Options Action, Dan Nathan suggested that investors who believe that the U.S. equity is going lower should consider hedging their long positions with an options strategy in iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE: TLT).

Nathan explained that iShares Barclays 20+ Yr Treas.Bond (ETF) traded sharply higher during previous crisis in 2008 and 2011 and also in 2015, when traders were worried about global growth. He believes that the Fed won't raise interest rates any time soon and he wants to make a bullish trade in the ETF as a tactical hedge.

Specifically, he wants to sell the April 120 put for $1.70 and buy the April 130 call for $1.70. If the ETF trades below $120 at the April expiration, the trade is going to lose money and he is going to have to buy the stock at $120.At the April expiration, the trade is going to make money if iShares Barclays 20+ Yr Treas.Bond (ETF) trades above $130.

Posted-In: Dan Nathan Options ActionCNBC Options Markets Media

 

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