Market Overview

Todd Gordon's 20-Year Treasury Bond Trade

Share:
Related TLT
Bonds, Yields And Interest Rates – The Confounding Relationship Explained
Doves And Hawks Of The Fed

On CNBC's "Trading Nation", Todd Gordon of TradingAnalysis.com spoke about an options trading strategy in iShares Barclays 20+ Yr Treas.Bond (ETF) (NASDAQ: TLT).

Gordon compared TLT with PowerShares DB Com Indx Trckng Fund (ETF) (NYSE: DBC) and he concluded that they have a very strong inverse correlation. Recently, DBC traded higher, while TLT  traded sideways. Gordon sees this as a warning that TLT could trade lower.

He wants to sell a call spread, to make a bearish trade. Specifically, he wants to sell the September 125/128 call spread in TLT for $1. The trade is going to make money if the stock stays below $126 at the September expiration. Its maximal gain is the premium collected and it is going to reach it, if the stock stays below $125. If the stock closes at $128 or higher at the September expiration, the trade is going to reach its maximal loss of $2. If TLT jumps to $126.50, Gordon is going to close the position.

Posted-In: Todd Gordon Trading NationCNBC Media Trading Ideas ETFs

 

Related Articles (DBC + TLT)

View Comments and Join the Discussion!