$iShares 20+ Year Treasury Bond ETF(TLT)$ 🐯🐅‼️ Attention Tiger Traders!
Join me in this exciting event as we explore the fascinating dynamics of the bond and equity markets, with a focus on strategic options trading for $TLT$. This is your chance to engage with insightful strategies and earn Tiger Coins while discussing the market’s latest trends. Don’t miss out on this opportunity to learn, share, and win!
Translation of the Event to English:
Recently, the global bond market has seen significant sell-offs, with the yield on the US 10-year Treasury climbing to approximately 4.7%, the highest since April 2023. Since mid-September, the yield has risen by more than 100 basis points, exhibiting a near-continuous upward trend.
This movement mirrors the patterns seen in 2022 and 2023, when global stock markets experienced substantial declines. However, during this current rise in bond yields, the equity market has only seen minor adjustments, which may suggest that further increases in yields could lead to more significant stock market downturns.
Goldman Sachs strategist Christian Mueller-Glissmann noted in a recent report that the correlation between stock and bond yields has turned negative again. If bond yields continue to rise amid poor economic data, it could pressure the equity market further.
Goldman Sachs stated:
• “Given the stability of the stock market during the bond sell-off, we believe that if negative economic news emerges, the risk of a short-term correction in equities may increase.”
Morgan Stanley’s Chief Strategist Michael Wilson also warned yesterday that with 10-year Treasury yields exceeding 4.5%, US equity valuations are under pressure. The negative correlation between the S&P 500 index and bond yields has become apparent, posing challenges for the equity market over the next six months.
Goldman Sachs added that the sharp increase in US long-term bond rates and the steepening yield curve reflect concerns about US fiscal and inflation risks, driven mainly by rising real yields adjusted for inflation.
What is the Best Options Strategy for Long-Term US Bonds (TLT)?
As Treasury yields rise, the $20+ year US Treasury ETF-iShares ($TLT$) may have reached a bottom range. The diagonal spread strategy emerges as an optimal way to go long on TLT.
What is a Diagonal Spread?
A diagonal spread involves options with different strike prices and expiration dates. Generally, the long leg has a longer maturity than the short leg. It includes diagonal bull spreads and diagonal bear spreads.
• Diagonal Bull Spread: Similar to the traditional bull call spread, it upgrades the strategy by involving options with different expiration dates. The trader buys a longer-term, lower strike call option while selling a shorter-term, higher strike call option, with an equal number of contracts for both.
TLT Diagonal Spread Example:
• Long Leg: Buy a call option with a strike price of $100, expiring on June 30, 2025, at $70.
• Short Leg: Sell a call option with a strike price of $90, expiring on February 7, 2025, earning $37 in premiums.
If the short leg is not exercised, it generates $37 in profit, covering more than half of the $70 cost of the long leg. The short leg can be executed monthly, allowing multiple premium collections over the long leg’s duration. If successful, these premiums can significantly reduce the cost of the call option, potentially even making it free.
Benefits of the Diagonal Spread:
1. Reduces overall premium cost, lowering the breakeven point and increasing win rates.
2. Allows investors to control risk by choosing varying short leg positions and durations.
3. Provides a low-cost method to enter long call positions, adding income through premium collection.
Tiger Traders, don’t miss this opportunity to discuss and master advanced strategies like the diagonal spread. Let’s trade smarter, share insights, and win Tiger Coins together! 🚀📈🍀
Happy trading ahead! Cheers BC 💰📈🚀🍀🍀🍀
@Aqa @NightMorph @Sonsonkok @TigerCommunity @EveryoneHuat @KitKat @Joanne1903 @大虎口 @Azmm @fearlesslyxauthentic @Kiwi_G @1PC @Bullaroo @Markchiow @BABAMood
美債左側時刻？如何穩健做多美債
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- fishhhh·01-11Exciting event ahead! Can't wait! [WOW] 🎉LikeReport