Exploring the Options Trade on TLT

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Sept. 18 (Bloomberg) -- In today's "Options Update," Bloomberg's Julie Hyman and Andrew Keene of Keeneonthemarkets.com examine the options trade on TLT in "On The Markets." They speak on Bloomberg Television's "Lunch Money."

First of all, we should explain, when you're looking at the tlt , it mimics the price of treasury, not the yield.

Basically come if you think their rates are going to go up, it means that the price of the tlt will go down.

What do you think will happen at the meeting later today as we get the announcement?


It has an inverse relationship.

If i am taking a short position on the tlt, i am getting a long interest rate.

I don't think they will taper today.

I would say 60/40 they taper.

If they don't taper today, they will by the end of the year.

So my trade-in tlt, i was looking at when the stock was selling 103 dollars $.30 -- $103.30. i make money at the stock is flat.

If can go lower.

It can actually move up by 1% and i still make money.

This is one of the worst looking charts out there.

I see this more as a position rather than a trade.

Having the tlt had blower -- would you mean a position versus a trade?

Earnings are trades.

I will have it on one or two days and it's over.

So this is a trade that i have a bet on.

I am risking 125 to make 75 and i am holding it to expiration.

I will not look to add to this position.

And i will not take it off.

So in december, i will look to see if it is profitable or not as opposed to trading the weekly options or the october options where those are more trades than positions.

So this is a longer-term bet or longer-term in your terms, through the end of the year, longer-term than you typically go, that rates will go up from here.

Whether you get taper or sometime before the end of the year.

When you look at the tlt itself and the rates, do you think we are going up toward 3% on the 10-year, which would mean lower on the tlt?

I think we will go higher from here.

3% is reasonable.

We could hold or sustain it.

Look at the daily chart of the tlt from the top left of the bottom right.

It is the worst looking sharp in as it goes lower, the interest rates go higher and 3% is a good target.

I wonder if you think that the economic data is mixed or weaker.

Does this support the tapering scenario?

We talk about that a lot in every single piece of economic data, do i think it really matters?

Yes, it has been a little bit weak, but the taper is set the place at some point.

Is it today?

I think it is 60/48 happens today.

I think it happens before the new year.

-- 60/40 it happens today.

I think it happens before the new year.

Thank you so much.

On the markets again in 30 minutes.

This text has been automatically generated. It may not be 100% accurate.


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