I'm done with my complicated trade in shorting TLT by buying ITM TBT calls. I was beginning to talk myself out of this trade right after I put it on (these things happen, you see), but then I got the TLT sell-off I was originally expecting. Good thing. I took the money and ran. Simple. Sold SEP TBT 25 call for $6.70, which represents a $1.50 profit. I really hate doing the "percent return" thing with individual trades. But for getting a $1.50 profit from a $5.20 investment, I can at least call it good.
I'm starting to think that maybe TLT is not overbought at these levels. Where would we prefer it, like around $100 or so? Yes, the move was parabolic and due for a spring back, but look at the yield on 10-year, 5-year and 13-week Treasuries and you see it's not crazy-end-of-the-world to be getting 3.5% on the long Bond.
The Fed doesn't really manipulate the long end anyway, so any conspiracy about manipulation will have to turn to the Bilderbergers, or some such secret society. On a side note, TBT is a 2x inverse fund, if I didn't mention that before. That means that it decays. Any long-term holding in such a fund needs to be evaluated with the realization that one is trading ice cubes in the desert and time is not on your side.
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