Hey there friend,
Professional traders are a pessimistic bunch…
… we always assume the worst.
This is why, while most traders are all over the field politically, they tend to UNIVERSALLY hate the national debt and budge deficits.
Every trader in the world is convinced, and has been convinced for 40 years, that we are heading for hyperinflation.
My father, a banker/trader from the 70’s, 80’s, and 90’s has been collecting gold and silver for the last 15 years.
He is CONVINCED that we are heading toward cataclysmic inflation (it’s in a safety deposit box… NOT in the house).
Yet, every time we rack up huge debt what happens???
Treasuries go UP not DOWN.
This is because the Fed is buying, and people are scared.
However, now that we MIGHT be rounding the corner… heading toward a vaccine for CV-19 there appear to be a few traders betting on a decent rise in yields and a fall in the price of the 10 year that I want to show you.
IEF is an ETF that holds US treasuries with duration from 7-10 years.
On Friday a trader bought, for IEF, a pretty decent amount of puts expiring in December.
Against a total OI of about 240,000, in one trade, a customer executed 5% of the TOTAL OI buying 12,000 of the December 117 puts.
Now, obviously IEF is WAY smaller than the treasury market.
But the players in IEF are typically also in the notes and bonds.
This customer clearly thinks the top in bonds is in and the IEF (and likely TLT with it) are heading SIGNIFICANTLY lower.
Personally, I think the IV is low and this is not a bad play longer term if you agree with people like my Dad.
But what kind of son would I be if I ever agreed with something my old man said???
Your Only Option,
P.S. – Inflation is a topic like gold in the retail investment world. This means that long term it can be a real problem, but short term retail can push things around. We see this all the time with our new product “Little John.” If you want to see how I do it, watch here…
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