A Peek into the Future

Published on: April 23rd, 2020

Raoul takes a look at the business cycle to give us an insight into where things might be going. It leads him yet again to bonds and dollars.

Comments

  • KK
    Kevin K.
    14 June 2020 @ 19:34
    I think R was pretty clear about his macro view , for those who need timing advice need to better understand risk management first.
  • JM
    Jeroen M.
    20 May 2020 @ 12:52
    Not great guidance / follow-up / clarification of the trade I have to agree. Think he was clear on June and nearing expiration now. Roll should have been done in weeks before I would say, now is too late. Possible to integrate comments in 1 central location (maybe publishing monthly with positions), and thereby easier to maintain / look after by the RV team?
    • KG
      Kos G.
      20 May 2020 @ 16:53
      First time? Unfortunately, no one from RV will read this thread here...
    • JM
      Jeroen M.
      21 May 2020 @ 06:33
      No very happy with RV and GMI. Think there is some merit maybe in a slack like conversation board (maybe per trade recommendation). Do not expect RV team to answer every question and do handholding (especially if trades do not work; which they should from with 15x return potential...), but maybe some structuring in the community (which is quite active) could be great opportunity for them? Anyway my 2cts,
  • MP
    Marc P.
    19 May 2020 @ 14:28
    Should we roll this or close out?
  • CF
    Chris F.
    18 May 2020 @ 16:35
    Is it still reckless to keep throwing money at this? The chart set up is still amazing.. For anyone who pushed out an extra month this could still be an incredible trade. Seems to me the Fed will have to ramp up bond buying again with all of the supply being issued by the Treasury?
    • KB
      Kevin B.
      19 May 2020 @ 01:19
      Considering time decay and the trading range, right now looks like a good time to average down in the next month out.
  • mp
    matthew p.
    14 May 2020 @ 18:56
    i guess ill be rolling my options for next month today without any guidance...
    • TH
      Trina H.
      14 May 2020 @ 20:58
      Indeed! Where the heck is the guidance? What are we to do?
    • BF
      Brad F.
      15 May 2020 @ 11:52
      Same boat here, would be nice to get an update
  • CS
    Charanjit S.
    11 May 2020 @ 20:23
    We need approximately a 15 basis point drop in treasury yields - from 0.34 to 0.19 in the next two weeks. This is unlikely to happen at this point given that the 52 week low was 0.259. If you sit on your options until the end - yes they become worthless. To me it makes sense to begin reducing your position not and buy call options for later in the year at a strike price of 126.5. The rational behind selling 127.5 call options was that the revenue generated from selling these calls would offset the loss from buying the 126.5 call options that expire out of the money.
    • SA
      Saad A.
      11 May 2020 @ 21:35
      We may get a boost from tomorrow’s CPI Number if deep -ve.
    • DV
      Didier V.
      12 May 2020 @ 12:22
      thanks
    • JW
      J W.
      13 May 2020 @ 09:00
      That makes sense. Btw, I called Saxo today and they informed me that they do not offer roll-over services so one literally has to close out the current one and open a new trade.
  • PB
    Patrick B.
    12 May 2020 @ 14:16
    Can someone tell me what price the futures on the 5-year T-note will be at if the yield went to 0%? Thanks.
  • DV
    Didier V.
    11 May 2020 @ 08:08
    Dumb question of the day: jun'20 calls, if they are otm by may 22 are they worthless? Are can they get itm after may 22 till june?
  • MK
    MILTOS K.
    7 May 2020 @ 18:18
    An updated on the strategy with notes bet will be helpful now from Raoul. Should we roll or let it run on Jun expiry?
    • AF
      Alexander F.
      7 May 2020 @ 23:56
      I second that. Would love to hear Raoul's feedback or other people's opinion in general. It seems today things started to move. I'm considering keeping June and adding some July - it's a bit of a larger position than I initially wanted but things are starting to align with rates falling, more talks about 0 rates etc. I remember also hearing that in previous crises the rebound lasted 3 months which would take us into June - enough time for people to see the issues with reopening: increasing case counts, customers offline, inefficiencies. I think people want the shutdown to end but more to go get more fresh air with friends and not get into a mall.
    • JW
      J W.
      8 May 2020 @ 16:45
      ... are you guys following twitter ? https://twitter.com/RaoulGMI/status/1258199015126110209
    • MO
      Matthew O.
      9 May 2020 @ 23:08
      JW2 W, Lots of mention of butterfly's. Was there a different trade recommendation made elsewhere?
    • JW
      J W.
      10 May 2020 @ 18:48
      @Matthew O. - not that I am aware of.
  • CF
    Chris F.
    1 May 2020 @ 19:26
    This is so crazy that this hasn’t broken out yet. Looks like it’s going to then falls back down.. wow
    • DD
      Derek D.
      8 May 2020 @ 16:03
      Just like the F'ing Dollar.
  • pa
    philip a.
    7 May 2020 @ 16:43
    Huge move in T note futures today! My trade is now profitable.
  • AK
    Aleksandr K.
    6 May 2020 @ 09:20
    What is the status of the call spread trade? shall one roll out to Jul expiry? or the bet for June is still on?
    • TH
      Trina H.
      6 May 2020 @ 13:26
      Good question. Looking for guidance!
    • jf
      jens f.
      6 May 2020 @ 18:51
      This was asked several times on last pro video but never answered. I think that when these trade recomadations (not that many) is given, they should have a follow up. dissapointing!
    • AA
      Alex A.
      7 May 2020 @ 15:49
      I'm going to let it ride until the end of the month and see what happens, then roll into July or sept if it's not looking good.
  • JH
    Jon H.
    4 May 2020 @ 15:32
    Help :) the trade is on. That leaves me with some questions: Scenario 1: All 400 options are in the money, and the person I sold the options too wants to exercise 50 options. What happens then? Will IB or CME sort it out automatically? Or will I be involved? Will I manually have to exercise my other 50 options to get the trade back in balance? Scenario 2: All 400 options expire in the money. I do nothing. "Options that expire in-the-money after the close on the last trading day are automatically exercised", CME writes. Does that mean that the futures contracts then show up on my IB account - and I'd have to sell these to realise the profit?
    • jf
      jens f.
      4 May 2020 @ 23:24
      im probably the last guy you should ask, but i asked saxobank, and to scenario 2: the bank sells it for you 3 hours before market close on exp date. scenario 1: they buy the option and thats that no? you dont have to be involved in anything else than take the profit. But, you should ask a trader:) im just watching youtube, and trying this as a hobby!
    • JH
      Jon H.
      5 May 2020 @ 13:12
      Thanks Jens!
    • DV
      Didier V.
      7 May 2020 @ 10:56
      The guidance probably lies in 'if you're lucky'. No luck you loose on this one.
  • GD
    Gerti D.
    23 April 2020 @ 21:40
    Hello, so to summarize, does 4/64ths means 0'020? Can someone please confirm?
    • GD
      Gerti D.
      23 April 2020 @ 21:42
      And I would guess that getting a price for 0'020 is better than getting it for 0'040?
    • JF
      Jordan F.
      23 April 2020 @ 22:22
      4/64ths means 0'040 for the 5 year note.
    • JF
      Jordan F.
      24 April 2020 @ 16:19
      Hi Gerti, I am sorry, according to CME (https://www.interactivebrokers.com/en/index.php?f=25228&course=33&cat=1 , see Lesson #6), 0'020 is equal to 2/32nds, so 4/64 would be 0'020.
    • JF
      Jordan F.
      4 May 2020 @ 14:50
      Hi Gerti, disregard my last comment. Since this is a option and not a futures, I can confirm that the price is in 64ths, so what you want is 0'040 (=4/64) for the call spread.
  • BT
    B T.
    30 April 2020 @ 15:26
    Hi Everyone, so I've been looking in understanding this trade for the past week. Now ready to buy the call part of it but I 'm not sure how to understand the quantity / size of investment. What does quantity 1 represents ? I'm on IB and selected ZF Jun01'20 126.5 Call. I have the following pop-up when looking to set up the trade: "You are trying to submit an order without having market data for this instrument. IB strongly recommends against this kind of blind trading which may result in erroneous or unexpected trades. Are you sure you want to submit this order? " How do I understand the size & risk ?
    • MS
      Moritz S.
      30 April 2020 @ 18:19
      Quantity 1 means 1 call. The error message just says that you can't see real time prices bc you didn't subscribe to it.
    • gb
      garrett b.
      1 May 2020 @ 17:40
      Buying and selling 1 call each doesn't sound like much of a position. Am I reading this wrong?
  • AP
    Aneil P.
    30 April 2020 @ 03:47
    Can someone help me figure out how to execute this trade on TD Ameritrade thinkorswim platform? Do you buy a 5 year futures contract? It seems there is no volume for those far out contracts. In that case do you buy the never term spread and keep rolling it out? What is the way to execute this trade? Buy US 5-Year Notes 126.5/127.5 call spread for around 4/64ths – giving you a chance to make 15 times your money if rates go to zero (buy 1x126.5 call vs selling 1x127.5 call – because your loss is limited to your premium, you don’t have to post margin). Sell Euro
    • mp
      matthew p.
      30 April 2020 @ 07:11
      ticker is /ZF on thinkorswim
    • DD
      Derek D.
      1 May 2020 @ 15:35
      As Matthew said below find "/ZF", then click/touch "Options", and then find the 126.50 strike and select the calls. THEN: touch "ADD OPTION LEG" and go down and find the 127.50 calls, and make sure you're selling those and buying the 126.50. You'll then have a vertical call spread set up, and you then just have to decide how many and at what price to bid for the spread. It executes both the buy and sell trades as a pair. Should be all set.
  • SA
    Saad A.
    1 May 2020 @ 13:28
    Am getting the feeling that the confusion on with respect to the May vs June is by design, how hard is it to come up with a straight response on this matter? I hope I'm wrong.
  • DH
    Dean H.
    28 April 2020 @ 13:11
    @Raoul, Just wondering if you could please clear up what expiry date we are looking at, May 22nd for or Jun 26th? Lots of different views on here. Cheers
    • MW
      Max W.
      28 April 2020 @ 13:24
      You buy the options contract on the June 20th futures I think the option on the June 20th futures contract expires may 22nd. I hope I've worked it out correctly. I'm going to double check & research this weekend. When you buy it, it should say June 20 in your account. But remember it expires may 22nd This is my understanding and I could be wrong.
    • RE
      Raymond E.
      28 April 2020 @ 23:19
      Raoul wrote below that, “the expiry date on the call spread was June 2020.”
    • MW
      Max W.
      28 April 2020 @ 23:48
      Ouch. I'm really confused now honestly :'(
    • MJ
      Matthew J.
      29 April 2020 @ 14:36
      Hey guys, after all of the discuss about this on the day of the trade release I went into the May 22 options expiry (this is on the Jun futures contract). Since then in the long post just below I have come to the conclusion that we want the Jun 26 Options Expiry (this is Sept Futures contract). This gives more time for rates to drop and at this point is much safer, perhaps we get rate cuts today (though not expected) in which case amazing. If not I plan to roll my contracts to the Jun 26 expiry, volume would have moved over by now or soon anyway. All thoughts welcome, have been battling with this for a while too.
    • PV
      Peter V.
      30 April 2020 @ 23:57
      @Harry M - it would be great if you are able to please confirm Raoul's original thinking, 22 May expiry or 26 June expiry? There still seems to be significant debate/confusion around what this is/was. Thank you
  • RT
    Rahber T.
    30 April 2020 @ 11:29
    Does anyone know if on IB we have access to emerging markets vs USD currency futures options? I'm looking at Brazilian reais, Turkish lira etc. Symbols would be much appreciated if so! Thanks!
    • RE
      Raymond E.
      30 April 2020 @ 16:50
      https://www.interactivebrokers.com/en/index.php?f=2222&exch=globex&showcategories=FUTGRP
    • HM
      Harry M. | Real Vision
      30 April 2020 @ 21:50
      On IB Real future is BRE
    • RT
      Rahber T.
      30 April 2020 @ 22:34
      Thank you!
  • IB
    Ivan B.
    23 April 2020 @ 16:08
    Hmmm has anyone put this trade via Schwab, I struggle a bit. The closest I found in terms of terminology is 'Futures Option Spread' for FVM20, however I only have two expiration dates to chose from 04.24.20 and 05.22.20 which doesn't look right to me... Under "Futures Spreads" I can't select call price which doesn't look right either. Appreciate any help. @IvanBiletsky
    • MD
      Mike D.
      23 April 2020 @ 16:34
      Hello @IvanBiletsky. I also use Schwab. Here's my interpretation. 1) The security I'm using is FVM20, which is the June 2020 futures contract for the 5 year treasury. I chose the June contract because the later September contract has no open interest in its options chains. 2) I then use the call options chain with May 22, 2020 expiry ... the only available choice, other than options expiring April 24. 3) Selecting the trade ticket for futures options call spread, I entered the BTO (buy to open) for the 126.5 call and STO (sell to open) for the 127.5 call with a limit on the buy side debit (the cost to me) of 2.0, which is 2/32 - equivalent to the 4/64 Raoul suggested. Further down in the question thread, I see that someone asked why one would sell the 127.5 call. The purpose is to defray the cost of the 126.5 call, at the 'cost' of reducing upside potential for the trade. Again, if I've erred I hope that someone will provide their thoughts.
    • MD
      Mike D.
      23 April 2020 @ 16:52
      @Raoul, would you please confirm that the thought is to use a vertical call spread expiring May 22 for the June contract on 5 year treasury notes? I notice that options expiring in June for the September contract now have some open interest, but the spreads are much larger than 4/64. Thanks very much.
    • IB
      Ivan B.
      23 April 2020 @ 16:53
      Mike, really appreciate your time. Even I can understand your instructions :) So you're not concerned that May 22 is a bit too close for the trade to play out? Ivan
    • IB
      Ivan B.
      23 April 2020 @ 17:17
      Mike, can you please clarify re "limit on the buy side debit (the cost to me) of 2.0" I put 2.0 and my order had been cancelled with the comment "check price". Maybe it's supposed to be 0-2.00?
    • MD
      Mike D.
      23 April 2020 @ 17:20
      Hi @IvanBiletsky. Sorry if I go to far in spelling out my thoughts sometimes ... it's just a habit. May 22 is indeed quite close, but seems to be exactly in line with Raoul's thinking. I am looking forward to his confirming this. He did say in a recent video update that the time when yields may plunge is likely quite close, which would seem to corroborate my date assumption. Since capital risk is modest using the vertical call spread approach, and since the options may be able to be sold at a later time to recover some fraction of the risk capital if necessary, I am comfortable dipping a toe into this trade pending Raoul's confirmation of the May 22 expiry target.
    • MD
      Mike D.
      23 April 2020 @ 17:24
      Hi Ivan. Yes, you're correct -- on the Schwab trade ticket using the selection 'Futures Options Spreads' (which ties the buy and the sell) I use order type "Limit/Buy" and the Debit field specified as "0-2.00".
    • HM
      Harry M. | Real Vision
      23 April 2020 @ 20:33
      Mike D, I agree your first comment.
    • jl
      john l.
      23 April 2020 @ 20:37
      Thanks Mike D. I would have had a hard time figuring it out without your help.
    • pa
      philip a.
      24 April 2020 @ 15:38
      Hi guys, This thread has been very helpful because I use schwab as well. I setup the trade, but I'm not getting any bids on the open market? Is it because the spread differential is now 0-3.50? for clarity : FVM20 BTO : 5/22/20 126.Call Call FVM20 STO : 5/22/20 127.5 Call Limit/Buy Debit - 0-2.00
    • IB
      Ivan B.
      25 April 2020 @ 02:40
      Hi Philip, Yes, Mike D. did a brilliant job explaining how to execute this trade on Schwab. It eliminated so much second guessing for me personally. My order at 0-2.00 haven't been filled in either, but 0-3.00 got filled. Looks like price has already moved... hopefully you will have a chance to get this trade going. Good-luck! Ivan (@IvanBiletsky)
    • RM
      Rohan M.
      27 April 2020 @ 16:31
      Thank you Mike, for explaining so clearly!
    • MD
      Mike D.
      28 April 2020 @ 18:54
      @Ivan, @Rohan, @Philip, @John --- to wrap up the conversation, please note that elsewhere in this thread @Raoul P. is specific that he is speaking of options which expire June 2020, and not May 2020. His specific words: "You buy 1x of the June 2020 126.5 calls and sell 1x of the June 2020 127.5 calls" Wanted to point out this important difference to you, for clarity,
    • pa
      philip a.
      29 April 2020 @ 14:48
      @Mike Thanks for the clarity. This whole process was quite confusing haha. So instead we buy Call option spreads on US 5 year T Note Futures for September (FVU20) with Option expirys for June 26th?
    • MD
      Mike D.
      29 April 2020 @ 15:43
      Hi @philip. I can't / won't give advice to anyone else, so I can't say what you should do. I can, however, confirm that what you describe is what I did for my own personal account. Good luck!
    • pa
      philip a.
      29 April 2020 @ 17:59
      @Mike Completely understand and I understand the risks vs reward! This is all on me :) I appreciate the response.
    • IB
      Ivan B.
      30 April 2020 @ 10:12
      Thanks Mike for the update. Yes, I can see there's lots of confusion. Mike, did you buy new June options for FVU20 or you rolled your FVM20 option spread to FVU20? What makes more sense in this situation?
    • MD
      Mike D.
      30 April 2020 @ 17:41
      Hello @Ivan. For the strategy I am using for my personal account, it made more sense to roll forward.
    • IB
      Ivan B.
      30 April 2020 @ 19:38
      Thank you Mike, appreciate your response!
  • pa
    paolo a.
    30 April 2020 @ 16:41
    I have a question on the Trade "Sell Eur", of course nothing in life is certain, but I get the feeling it is going the other direction. Did I get the timing wrong on the 27th of April? At what level we should set our stop loss?
  • JR
    Josh R.
    29 April 2020 @ 23:23
    Does the 5 year note trade still stand given the feds recent announcement? I haven’t placed trade yet and I am wondering whether I still should.
    • MW
      Max W.
      29 April 2020 @ 23:26
      I've reduced my position but still left some on the table.
  • MO
    Matthew O.
    29 April 2020 @ 21:59
    I'm trying to nail down the mechanism that will result in falling yields. Would it require the Fed to enact yield curve control (YCC) and artificially push yields towards 0? It seems like the massive treasury selling pressure from foreigners is a strong headwind to this trade. Lyn Alden on twitter (@LynAldenContact) does a great job of documenting this. I'm just not sure "real" market participants can actually push yields lower and it would in fact require Fed action. Thoughts?
  • AA
    Alberto A.
    23 April 2020 @ 14:49
    Thanks for the update. Agree with the Euro. How do you see the Aussie dollar? I've been waiting to weaken but it is hugely tied to commodities and imports/exports to China. What is the timing on the call spread? Did I miss that in the report. Cheers!
    • RP
      Raoul P. | Founder
      23 April 2020 @ 14:59
      June
    • LM
      Little M.
      29 April 2020 @ 20:31
      Raoul, my husband and I just put $5k into the call spread but we're debating about whether you meant for it to expire on May 22nd. We just read all the comments on here and it's still not clear.
  • DV
    Didier V.
    29 April 2020 @ 18:48
    I think we have to use darts to know if it's may 22 or june 26.
    • Am
      AMMAR m.
      29 April 2020 @ 19:14
      I think you could use a judgement call here. I would probably go with the June 26th if you're leaning towards a less aggressive drop in yields. That just means if the move to negative yields happen sooner than expected you could have a choice to leave a little bit of money on the table but close with a hefty gain.
    • DV
      Didier V.
      29 April 2020 @ 19:19
      I was making a joke but less guessing would be my trade recommendation lol.
  • JM
    James M.
    29 April 2020 @ 18:16
    Harry/ Raoul Appreciate you are both busy but It would be really helpful if someone from RV could clarify which call option it is supposed to be. Is it the one which expire on 22 May (which is referred to on the trading platforms as June) or the 26 June ones? It would only take a minute to clarify and would stop a huge amount of the clutter which has now appeared on this page. Thanks
    • JE
      J E.
      29 April 2020 @ 19:17
      A bit of a bumpy trade as a new pro subscriber. I've bought both expirations..
  • Am
    AMMAR m.
    29 April 2020 @ 19:16
    Hi Raoul, What data would you need to see that would alter this thinking or affect this trade? We are going to see a lot of the follow-on indicators such as PCE, CPI, GDP etc start to come through over the next few days and what data would change the thesis here? Harry or others at Real Vision tracking this feed, would love to get this in front of Raoul for a reply since he is probably not tracking this feed. Thanks in advance!
  • mp
    matthew p.
    29 April 2020 @ 16:59
    just got into the trade on thinkorswim /ZFM20 @ .5/64ths today. If we're looking for 15 times upside from 4/64ths does that mean at my fill price I should be closing the position at 120 times upside? Or is there some faulty logic there... I'd like to know so I can be ahead of the pack when the time comes and get my exit filled. Thanks for any insight anybody can offer here!
    • pa
      philip a.
      29 April 2020 @ 17:56
      I believe Raoul clarified to buy the Call options that expire in June, which would correspond to the T note futures for September (see other comments). This would be ZFU20 on your platform. Other people made this same mistake (as did I), and we have rolled over to September. I believe your trade has higher upside, but the time frame is quite tight for a may 22nd expiry. I'm more comfortable with the additional month (less upside).
    • MW
      Max W.
      29 April 2020 @ 18:03
      Philip I don't think so. I think he's talking about the may 22nd expiring one.
    • pa
      philip a.
      29 April 2020 @ 18:20
      @Max W I guess it'll be up to your own interpretation, but this is how I took it after rereading: Expiry refers to the Options spread, not the T note futures. Raoul : "Just to be clear... You buy 1x of the June 2020 126.5 calls and sell 1x of the June 2020 127.5 calls. Usually call spreads are priced as a "package". This means that you can only lose the premium. So if you buy $1k of calls spreads, that is all you can lose. You can potentially make $15k, if you are lucky" Also Raoul : "Sorry, the expiry date on the call spread was June 2020"
  • MW
    Max W.
    29 April 2020 @ 16:39
    Is anyone else adding to their position this week? I am.
    • AP
      ANTHONY P.
      29 April 2020 @ 16:57
      Which positions? Julian's EWW and XME calls paid off this week. I'm letting them ride. That's enough risk for me.
  • MJ
    Matthew J.
    27 April 2020 @ 19:07
    Hi Raoul, Julian, Harry & Everyone, I am a newbie and learning a lot as I go, I have two main questions/discussion points for whoever is willing to answer. Firstly, after trying to get my head around treasuries I am still uncertain about the mechanism that will take the nominal yield down. Are we expecting a move by the Fed (perhaps after this upcoming meeting) to cut the Fed Funds rate, or can we expect the market to force this? I seem to get the idea that the market is pushing for lower rates and this might be expressed in the Auctions anyway, i just want to get an idea of the mechanism we are expecting. Additionally, the time scale is so short for expiry on 22 May. Why Raoul are you so certain that this is enough time? I assume it’s linked to the earnings, PCE and Fed meeting this week. Just trying to ensure i have full clarity over the move expected and how it could manifest itself. Many Thanks Matt
    • MW
      Max W.
      27 April 2020 @ 19:42
      Same here. Great questions. I went out a little bit into July with my positions. I don't feel qualified to answer, but I reread the analysis several times and it made sense. The crash in economic productivity in the last few months globally has been stunning. Everything is crashing faster and harder except for what the fed is allowing to be priced in corporate credit and by some extension stocks. I'm hoping Raoul or one of the other participants will give you a better answer than I have. I'm still learning the ropes but I've been trading a while now. I don't think this trade is a sure thing but it has a nice risk reward scheme. It could very will turn a handsome profit. I wouldn't want to hold a large position in this trade. Just a small one perhaps? That said, I bought about $8k worth of this trade
    • MJ
      Matthew J.
      27 April 2020 @ 19:46
      I know from Komal Sri-Kumar, that Bond Yields are a function of Inflation expectations and real economic growth expectations. To follow on from my questions above, are we expecting rates to drop due to earnings and PCE data pointing squarely at deflation and economic slow down?
    • MJ
      Matthew J.
      27 April 2020 @ 20:02
      Max, thanks for your reply. I also can see the shear devastation of the real economy, it makes sense that we would see lower rates if deflation starts to be priced in. Saying that I was confused by the figures in the report of +4.7% real rates, can anyone explain it. I was reading into R real = R nominal - Inflation but am unsure how to get to +4.7% I have read most of the comments but sorry if this is treading over old ground.
    • DV
      Didier V.
      27 April 2020 @ 21:20
      I have no idea (besides what he wrote) why Raoul thinks this is a good trade. If I have surgery I don't know why the doctor does what he does. I'm ok with that. Impossible to substitute 30 years experience in a few pages.
    • AE
      Anthony E.
      27 April 2020 @ 21:53
      The sense I get from this thesis is it's simply a risk/reward opportunity to take if you can afford it, and the 5/22 timeline lines up with 15x upside pending very logical short term conditions driving up the 5yr, with capped downside...now that I say it, it sounds like the concept of trading. Haha
    • GP
      Geoff P.
      28 April 2020 @ 00:51
      Of course, I can't speak for anyone else, but as to the mechanism, it's purely supply and demand. If there is any hiccup in the Feds plan, or the perception of the plan, then risk assets will get sold (credit, equities, etc.). That money will look to go somewhere for a positive return. The Fed is eating up a lot of T supply and any increase in demand outside the Fed could push rates to zero. Of course, the participants in risk assets are very much looking past this shock as a brief one off event. The amount of stimulus so far exceeds that of the New Deal from the 30s as a percent of GDP. This is enormous as the damage is no where near that currently. This is all very precarious IMHO. Also, he was advising on the June expiration, not May. He confirmed in the comments and you can see that from the price he mentioned. Stay nimble.
    • RE
      Raymond E.
      28 April 2020 @ 02:06
      Matthew, you wrote: “the time scale is so short for expiry on 22 May.” However, Raoul wrote below that, “the expiry date on the call spread was June 2020.” He repeated that it is June in at least two other places. Matthew, you also wrote: “Why Raoul are you so certain that this is enough time?” What Raoul and Julian are offering are probabilities. I doubt either of them would ever suggest that something is “certain.” I see that as an important distinction, which ideally guides one both in whether to act on a suggested trade, and to size it appropriately – i.e., with an awareness that a probability that something will work, includes a probability that it will not work – e.g., 60% probability that it will work, includes 40% that it won’t.
    • MJ
      Matthew J.
      28 April 2020 @ 04:00
      Hi all, firstly thank you for your reply. @Didier V At this point this is all learning for me, I don't expect to have my hand held as such, though i would like to learn a framework. I know we all have different levels of acceptance too which is fine. This platform does offer an edge on the market via every piece of content and I am actively trying to put the pieces together for myself for the future. @Anthony E. I can see that perhaps it's just a pure R.R. play as the setup might be great, I just want to know that. As I'd love to be able to monitor it myself and take any profits on moves that happen where appropriate to the overall situation. Especially as my trades are 22 May expiry I don't want to let the time decay on the options kill them, if we don't see a lower yield the price spike may not happen in time. @Geoff P, thanks for your explanation. I can see that we have potentially two factors then, the market forces and the Fed actively cutting on Wed, I guess time will tell. @Geoff P , @Raymond E. Regarding the Expiry, having read through the comments before making my trades I came to the conclusion that ZFM0 the underlying Jun futures contracts was Raoul's meaning and the expiry for this is 22 May. At the time it was the only contract with signifcant volume & that offered 15X on investment. The Sept Contract expiry '26 Jun' did not offer the same R.R. ***If I have misunderstood this, it appears many others have also below so some clarity would be useful.*** @Raymond E. I agree with your point regarding the trade, perhaps my use of the word 'certain' was incorrect here. I meant to question the short time scale and why this was chosen vs the Jun expiry (as i understood it). I assume this is with regards to @Anthony E's point that it is the trade which offers the best R.R. Thanks all.
    • GP
      Geoff P.
      28 April 2020 @ 10:50
      Hi Matt when I got this note the mid point of the spread on the Jun expiry was 0'022 (2.25/32 or 4.5/64). That's 12x. The mid point of the May expiry was 0'015 (1.5/32 or 3/64). That's 18x. In 64th, the June was 1 tick away and the May was 2. It seemed more reasonable to me that he was referring to June and I didn't have to sacrifice that much capital to over double my holding time. In the comments below he confirms June. Why the options chain quote not read June for the June expiry? I have no idea. Probably the same reason some brokers quote these options in 1/4 of 32nds and some quote them in 1/2 of 64ths. lol
    • DH
      Dean H.
      28 April 2020 @ 11:44
      Geoff, when did you buy the spread? I bought within about an hour or so after the recommendation was published and the June expiry was definitely not that cheap. Has come down a lot now though.
    • GP
      Geoff P.
      28 April 2020 @ 11:53
      Around noon on the 23rd. If you look at the bar on zfu20 on that date it had a much wider range than the front month. Price when I executed was 125'065.
    • HM
      Harry M. | Real Vision
      28 April 2020 @ 13:21
      Some thoughts on this. In 2008, one of the reasons why bonds rallied was that the Fed was cutting rates. Raoul was pretty explicit that he expects rate cuts, and I think he argued for negative Fed funds rates (because inflation may well become very negative). But even if the Fed doesnt cut rates to negative levels, Fed Funds may anticipate the possibility of negative rates. I notice Kocherlakota argued for negative rates recently. Speculation of negative rates is enough in some environments. Also in the scenario that Raoul is describing, reasonable individuals would be desperately keen to find places to leave money that were safe. Thats why negative rates have been possible globally. Widespread defaults on previously considered safe securities (think CMBS) might well prompt a rush to "quality". Where exactly would you store wealth to keep it safe if you started to see a lot of defaults a restructurings around you? Would you prefer to lose 1% of your wealth or 50%? Real rates are nominal rates minus inflation. So if inflation was -5%, then nominal yields would need to be -5% to give you zero real yields.
    • MW
      Max W.
      28 April 2020 @ 14:50
      Thanks Harry. You sir are a gem
    • MJ
      Matthew J.
      28 April 2020 @ 14:59
      @Geoff P. Thanks for the input, honestly you may well be correct here and the longer time to expiry is useful. Having re-read all of the comments it does seem that many people have expressed their view of May 22nd Expiry. I can read June both ways at this point haha. When Raoul says June then he would be referring to the Options Contract expiring 26 Jun on Sept Futures Contract. @Harry As always appreciate your time answering our questions here, I understand your explanation and imagine that without a specific rate cut tomorrow we will be waiting to see how the markets react to the any deflationary data and defaults etc. For complete clarity can you clear up for us all what exact contract Raoul has recommended? This might seem a bit noddy, I have been reading into this for a while and still don't know if 'June' in this context refers to the Futures or Option expiry. I am now leaning towards the later date for option Jun 26th expiry on Sept Futures, but many have also argued for the May 22 in this chat which i also own.
    • GP
      Geoff P.
      28 April 2020 @ 16:10
      Yes, I think you can argue either way but I looked at it like this; the pattern (a significant weighting in the trade decision it would seem per Raoul's post) hasn't confirmed yet. When I trade a breakout, I will go in in one lump on confirmation. In this instance there really isn't enough meat left to wait for the confirmation so I don't mind entering early (higher probability of failure, but the payout more than makes up for it). When entering early, I always nibble over many buys and potentially days. I'm a very conservative investor and am perfectly fine missing out. As it stands I was able to get full exposure to this trade for less than the recommended price with the June expiry. Sometimes it goes the other way and I'm under allocated. Sometimes I sit out all together because I don't agree with the thesis, or the risk reward profile isn't good enough for me. In the end it's a recommendation and I'm ultimately responsible if things go south, so I manage risk in my own way. Best of luck!
    • MJ
      Matthew J.
      29 April 2020 @ 14:29
      Geoff, Thanks yet again for your insights in how you are taking the trade recommendations here and applying them your own strategy. Definitely food for thought, much appreciated. At this point, I have changed my view and agree with you that the options contract we want expires on the 26 Jun. It just so happens to be the Sept Futures contract. I will be waiting to see how things move this week and roll my positions to Jun. Matt
  • PA
    Peder A.
    28 April 2020 @ 09:51
    Would much appreciate an explanation of the chocks of using EUR on the short side. If markets become really turbulent and starts pricing in eg Italy leaving I would expect EUR to rally instead
    • PA
      Peder A.
      29 April 2020 @ 05:54
      *choice
  • RH
    Rob H.
    24 April 2020 @ 15:15
    Hi, Raoul or Harry, Regarding the 5 year - Futures Option Trade With 28 days to expire, what catalyst do you see in such a short time horizon for this to trade to work? I see it can't be done with more time so we don't have of a choice, I like the risk-reward so I'm in yet I'm curious as to what data is going to be released in time for rates to be triggered to 0 or negative on the 5-year note.
    • RH
      Rob H.
      28 April 2020 @ 21:10
      I will make the assumption the Fed Meeting tomorrow will be the catalyst?
  • PS
    Prashant S.
    28 April 2020 @ 17:13
    Hi Raoul, How do you feel about put spread on S&P 500? Something like buy Dec 2600 puts and sell Dec 2400 puts? about $50 premium for a chance to make around 8X if S&P trades to 2400 by December. Thanks
    • MW
      Max W.
      28 April 2020 @ 18:02
      Nice! I'm going to check that spread out
    • PS
      Prashant S.
      28 April 2020 @ 18:41
      Nevermind. It's 4X return. My bad. Amazing what a walk in the sun can do,
  • DS
    Dwinanto S.
    28 April 2020 @ 13:44
    Hi Raoul, I think there's a lot of confusion on setting the right instrument. I think people either on ZFM0 (in Saxo this is part of June option chain, expired / last trading day 22 May . On my other trading system is labeling this as May) and ZFU0 (in Saxo this is part of July option chain, expired / last trading day 26 June, and on my other account is simly as June) For ZFM0 the return if we setup right now is almost 30X with probability of 15% while ZFU0 the return is about 18X (which is closed to your original estimate) I think on one of the thread you mentioned the expiry date is June which make sense for ZFU0. I think it will be great if you clarify the exact expiration date so if incase people are wrong on the ZFM0 they can roll over the ZFU0. My ZFU0 is already starting to gaining profit (just setup few minutes ago). ZFU0 June expiry make sense since your 10 Year Bond Futures also on expire June. Thanks & stay safe
    • SS
      S S.
      28 April 2020 @ 13:46
      Hi Dwinanto, Find me on Twitter on @SteveSingfin and I will help you with screenshots. This goes for all others who use Saxobank.
    • MW
      Max W.
      28 April 2020 @ 14:46
      Thanks Steve S. for your help If anyone wants to find me on Twitter I'm Grey_Ghost_
    • DS
      Dwinanto S.
      28 April 2020 @ 15:38
      Thanks Steve, I've setup 1 leg on Saxo to expired on 22 May, I'll probably just roll over if I'm wrong
    • SS
      S S.
      28 April 2020 @ 15:43
      @Dwinanfo, sounds like you are in the wrong recommended trade. It seems you are trading the futures. The recommended trade is Future Options. OZF is the ticker on Saxo.
    • DS
      Dwinanto S.
      28 April 2020 @ 18:18
      I'm trading future options, on SAXO the ticker is OZF but if you check carefully the underlying is ZFMO. On TD Ameritade they use /ZF and I think on Schwab they have FV (you can check the CME site to confirm this) my ZFU0 (expire in June) is already gaining while my OZF is OTM . I was testing different system & did position sizing to manage risk.
  • JD
    Jamie D.
    24 April 2020 @ 13:05
    Hi Raoul, I made this recommendation to one of your mentees about a week ago. Specifically WRT trade recommendations: It would save a lot of time and effort if they were split Pro option Vs Retail option If there is no alternate to pro version -fine. A simple X under each header would work in a table format. I am not pro , and have just waded through 224 queries from many people whom may fit that bracket. So even for them it’s not easy to understand/implement trades at times. I would fit in the retail group. Hence after reading the article I may look at an FX trade only. Which is fine. I don’t have to waste any more time trying to understand a trade I can’t place very easily/if at all and in a hurry. Julian could do the same: Pro offering vs Retail alternative Just trying to help the members whom are not necessarily in the industry but still enjoy the content and would like to be able to act on recommendations when appropriate. It may also save you some time with questions. Appreciate your efforts, Jamie
    • MS
      Moritz S.
      25 April 2020 @ 21:38
      When you signed up for RV PRO it said that the service is for *experienced investors*. If you can't figure out how to set up a simple option trade that's on you.
    • MJ
      Matthew J.
      26 April 2020 @ 09:31
      Jamie, I too am new to this game, though I would say that if you have the time to learn there are some great videos on YouTube to help you learn about options and how to use whichever trading platform you have. I was surprised by how simple it is overall, of course pricing and timing of options seems little more complex etc, however with Raoul's specific trade you may find that you can follow some tutorials on YouTube, additionally the CME has some great learning videos to give you an understanding of what is going on. Good luck with your trades here.
    • GD
      Gerti D.
      26 April 2020 @ 15:53
      Hi guys, it would be great if you could post the links to the the educational videos here. The little research I have done so far has provided some contradictory inputs. And when you are new to the thing, it's hard to distinguish the right from the wrong. Thanks
    • MJ
      Matthew J.
      28 April 2020 @ 14:13
      Gerti D. In terms of videos I personally used the CME YouTube channel to get a lot of the basics. I have also used the Interactive Brokers videos for specific brokerage details.
  • aa
    armghan a.
    27 April 2020 @ 17:41
    Please dont judge but I have Robinhood. IEI is the ticket for 3-7 Treasury Bond ETF. Current price is $133.17. Can I buy $134 calls for few months out?
    • MW
      Max W.
      27 April 2020 @ 17:48
      Be very careful my friend. I have no idea about that. It's very likely that etf holds a basket of bonds and not just the 5 year bond.
    • HM
      Harry M. | Real Vision
      28 April 2020 @ 13:13
      The ETF does hold a basket of bonds. But it doesnt invalidate the broader argument. So I would argue you can. Just remember that entry price matters. Dont overpay.
  • AP
    ANTHONY P.
    24 April 2020 @ 12:21
    Look like some central bank some where is buying up the euro this morning right on cue. It's like they have a pro-level membership here.
    • DD
      Derek D.
      25 April 2020 @ 12:07
      Yup they really f’d me today. Had a helluva setup in the overnight going. Re-entered in the afternoon, and then they squeezed that to death in the final hours too.
    • AP
      ANTHONY P.
      28 April 2020 @ 11:51
      ... and the euro continues to rise off of the critical support level (after dipping down to kiss it) behind Raoul's trade. It's now up to 108.886. The last time this happened members were on this board talking about 70%+ losses on on their options. One wonders whether the central banks are watching that same support level and doing "whatever it takes" to prevent the euro from falling below it because they damn well know Raoul is right that horrible things will happen if they don't. One also wonders if one should wait and buy the euro puts if the euro hits about 110 (with automatic sell to close orders down near the critical support level ... 107.8 or so). The market drives it down until central banks drive it back up.
  • jf
    jens f.
    28 April 2020 @ 03:40
    Can someone screenshot the whole order in saxobank? I want to to place the order regardless that i’m not a trader since im convinced that raoul are. I want to be sure i dont fuck it up! If so, please email me on jfjelnset@hotmail
    • MW
      Max W.
      28 April 2020 @ 04:37
      Sorry Jens. I'll hit you up tomorrow. Don't worry. The trade has sold off over the last couple days so you're going to get a good entry. It's ZF on interactive brokers. Just buy the June call at strike 126.5. I wouldn't even worry about the put leg at this point. The call is cheap enough right now
    • MS
      Moritz S.
      28 April 2020 @ 09:20
      There is no put in this trade. The second leg is a short call with a higher strike.
    • MW
      Max W.
      28 April 2020 @ 11:20
      I meant call. Sorry it was so late
  • GP
    Geoff P.
    24 April 2020 @ 18:21
    I think anyone interested in the 5 yr note call spread should take the time to learn about options and futures pricing. It's not difficult, but this tool has tremendous upside potential. There is no assignment risk in this call spread; even being an American style option. If you're lucky enough to have the 127.5 call assigned, you will exercise your 126.5 call and thank them as you book your max gain. You will only have this luxury if the price of the futures contract is well above that 127.5 strike. If that is the case, you could always proactively book the gain on the trade by closing it out. Contracts are 100k notional and priced in 1/4 of 32nds. So when you see a quote like 0'015 (1.5/32), or 0'017 (1.75/32) or 0'020 (2/32), etc. for the call spread you can either calculate the ticks (128 total in a point), or calculate the decimal value (both will lead to dollars at risk or potential profit. As to the margin issue, IB is terrible, yes, but there are others that will not charge (smart enough to understand the risk). Shop around. This margin issue shouldn't discourage the trade unless you're running the portfolio at max and you can't afford the margin. Study up on the CME website. They have lots of tools. Best of luck.
    • JL
      J L.
      25 April 2020 @ 12:15
      this. good luck
    • DH
      Domen H.
      26 April 2020 @ 11:13
      To add to the mess of these anchronistic units, for strike prices they are expressed in 32nds, while the option prices on these contracts are denoted in 64ths. You can observe this by checking calculated premium price (say 0'05 corresponds to 5/64*1000$=78.13$ per option), and by checking the label of the contract before the order before it gets confirmed (126'16 > 126.5).
    • MP
      Matthew P.
      26 April 2020 @ 15:36
      Anyone have solid broker recommendations to do options on futures besides IB/saxo...the pretentious -"I'm so smart and know the best info but I'm not gonna tell you; do ur hw winky face"- act is so annoying and overdone in finance.
    • GP
      Geoff P.
      27 April 2020 @ 19:32
      I don't recommend brokers because they all suck. You have to compromise. I love the ToS platform e.g., but their options pricing model is weak. I need to model vomma. You can't trade eurodollar options. I love how I can enter one order on IB and allocate to the various accounts I manage. They have good product offering, but make you pay for data. I hate their interface. It's like using dos. I use 5 brokerage companies including a full service one. Nearly every major brokerage co will be able to get the job done on futures and options. You have to find out what you're willing to sacrifice, and what you won't. This will only come with experience. As you open accounts, you'll likely open more accounts and/or move accounts, etc.
  • RT
    Rahber T.
    24 April 2020 @ 23:56
    Hi All, Why not play this most simply by buying calls on TLT? It’s decent volume and if the short end of the curve goes to 0, the long end will also likely go down, not to 0 but much lower than it is now anyway. Are there any reasons to chose IEF vs TLT for this trade? Thanks for your input! And to Raoul and the RV team (especially Harry)
    • DM
      David M.
      27 April 2020 @ 18:15
      TLT is a 20+ year etf, and from my perspective we're trying to capture the movement of the short-intermediate term treasuries. IEF is 7-10 which is more of the correct range we're looking to capture. I've personally really liked the play on the 5 year for a while, I think we will see huge movement there. We will in the 10 year too, but Raoul has been long 10 years for a while. Just started adding 5's.
  • CS
    Charanjit S.
    27 April 2020 @ 18:10
    Thanks Harry. For the group: there options on the EURO: on the IB platform, type in EUR - scroll down to "Europe and Monetary Union Euro" - select "future options". The current exchange rate is EUR:USD (1/1.08) - ie it takes $1.08 USD to buy one euro. A EURO depreciation will drive this exchange rate down. Therefore we want to purchase a put option (because the price will move down). The longest dated put option when I checked was Dec 2020. Hence, you would purchase put option at a transaction price below 1.07 - the lower you go the more optimistic you are of a depreciation. Similarly, enter JPY for YEN options. The current JPY/USD exchange rate is 0.0093. Same thing - purchase put option with a lower value.
  • jR
    jacco R.
    27 April 2020 @ 18:01
    Hi Raoul - I agree with your views however have a harder time on the timing. There is so much liquidity out there which in a weird way is producing (once again) all sorts of misalignments. We see bond yields hardly moving and actually being down in the US to up in Europe. Commodities with Oil being down and copper being slightly up, FX relatively stable and we all know what happened to equities. It seems your trade view is more a roll-over or at least a tempering of the rise of the equity market. I understand you on the technicals 50-62% retracement for the equity markets but I am seeing that both DXY and US Treasuries are on the high end of their risk ranges. They can break lower (USD down and US Treasuries up) or break higher. Again I understand your view on a longer-term time horizon the issue now is fighting the tape.
  • BX
    Ben X.
    24 April 2020 @ 20:43
    Since the price of ZF will keep rising, why should I sell a $127.5 Call? Suppose I hold these two sell and buy call options to the end, what will happen? Will I be forced to buy the ZF futures? If the interest rate goes to 0, what would be the future price of ZF? Maybe my questions are very basic, but I would like to clarify these questions before placing an order.
    • VC
      Varun C.
      24 April 2020 @ 22:29
      Literally all of these questions have been answered in the various comments on this page mate so study those and you'll get there
    • DV
      Didier V.
      25 April 2020 @ 07:52
      Even a genius needs help to learn how to ty his shoelaces so don't act to blasé please.
    • RT
      Rahber T.
      25 April 2020 @ 17:51
      Ben - an option gives you the right but not the obligation to exercise it - so you won’t be forced to buy the futures unless you want to - typically you’ll just sell it off (ideally at a healthy profit!). I think based on some of the comments below the price of ZF at an interest rate of 0 is around 127 so that’s why Raoul is suggesting the call spread he does. Good luck!
    • HM
      Harry M. | Real Vision
      27 April 2020 @ 17:35
      If the ZF will rise enough you should not sell one. If it doesnt rise as much as we think then reducing the cost of the position is to your benefit. Ultimately call spreads make sense when you dont believe the underlying can go a very long way higher.
  • PA
    Peder A.
    27 April 2020 @ 11:04
    Raoul. Strong logics behind 5Y trade. But I find reasoning behind USD/EUR being cut short in explaining Long USD - but missing short EUR. What is the reasoning behind the EUR choice? I am a European. I can almost guarantee there will be no fiscal union. If crisis strikes again I find there to be a coin toss where EURO go. If Italy leaves together with southern friends it might well rocket higher. I am instead leaning toward using Peso, Norwegian Krona or even GBP. Thoughts?
    • JH
      Jon H.
      27 April 2020 @ 12:43
      Good comment, Peder. It would be very interesting to hear why you are negative to the Norwegian Krone and which time frame you link that view too.
    • PA
      Peder A.
      27 April 2020 @ 13:39
      Norwegian Krona is heavily dependant on oil and European economy. Country is not very competitive in most industries and has a large social welfare program. Has had a booming real estate market that has begun unwinding. Not trying to be overly smart. Just see it as a more straight forward USD pair trade than Euro that might bring unwelcome surprises.
    • JH
      Jon H.
      27 April 2020 @ 17:29
      Thanks Peder!!! The NOK has weakened a lot. If the real estate market trips, that would definitely be negative. It is likely too. Oil and gas prices should go up from low levels. Also the fiscal part is sound with a trade surplus and a $ 1tn SWF. Maybe the market will appreciate that further down the road. Good luck!
  • CS
    Charanjit S.
    27 April 2020 @ 17:22
    Does anyone have any thoughts on the best way for trading the Yen and Euro devaluation. I've called IB and I've been told that they don't offer options on currency spreads. The second option is a simple short - but their is not alot of return there unless your using a 50:1 leverage - perhaps best avoided. There are FOREX contracts for difference (CFD) - I think options on these is the way to go. Any thoughts. As an aside - I think the collective works really well here.
    • HM
      Harry M. | Real Vision
      27 April 2020 @ 17:29
      There is a Euro USD future on IB, and it does have options. I dont know regarding yen
  • KA
    Kristian A.
    27 April 2020 @ 14:57
    I timed this well...only down 41% since entry lol
    • MW
      Max W.
      27 April 2020 @ 15:15
      I just entered the trade today. It looks like it's going down in value a lot. But I think Raoul's reasoning for the trade is sound. It's sort of a long shot but I like it
    • SA
      Saad A.
      27 April 2020 @ 15:30
      Agree, particularly impressed with Varun’s passion and high energy. Comes out clear in his writing style.
    • KA
      Kristian A.
      27 April 2020 @ 16:13
      sorry, only down 49%...going for an even 50% before I average down ;)
  • SS
    S S.
    24 April 2020 @ 14:52
    Can someone who has access to Bloomberg Terminal, please kindly share the 5YR Price/Yield. In particular I would be grateful to know the yield for the following prices: 126.5 - What is the yield for this price 127.5 - What is the yield for this price What is the price for Minus 0.30 yield Thanks in advance.
    • BX
      Ben X.
      24 April 2020 @ 20:23
      I wonder the same question. How high could the ZF price go?
    • gb
      gav b.
      27 April 2020 @ 15:08
      Hi Steve, Harry answered this question down near the start of these comments. "Harry M. | Real Vision Apr 24, 2020 @ 06:31 2 0 So I cheated (used a bloomberg terminal) but I can tell you that the current futures price is a yield of about 34bps. 126.50 strike is about 21bps away - so still positive. The 127.5 is about 41 bps lower, so a negative yield."
  • RP
    Raoul P. | Founder
    23 April 2020 @ 15:00
    Sorry, the expiry date on the call spread was June 2020
    • JL
      Jonathan L.
      23 April 2020 @ 16:33
      The June 2020 expiring on May 22 or the July 2020 expiring on June 26?
    • RH
      Rob H.
      23 April 2020 @ 19:19
      29 days to expire, what catalyst do you see in such a short time horizon for this to trade to work? I see it can't be done with more time so we don't have much of a choice but I like the risk-reward so I'm in! Yet, I will bet in a GTC order to close at 50% of max profit, I'm not greedy.
    • WS
      Winslow S.
      24 April 2020 @ 01:28
      I'm a little surprised at the aggressiveness of the timing call. June options expire May 22, so we have 1 month for this to get in-the-money. Why not give it 3 months (more expensive, I know)? What makes you want to pick out this next month for the inflection?
    • SS
      S S.
      24 April 2020 @ 11:48
      Hi Winslow. You can take some risk off once options start making money. Don't need to wait all the way until May 22nd.
    • DS
      David S.
      27 April 2020 @ 14:50
      Hi Winslow, Looking at the chart would suggest that there is a big seller sitting on the market at around 125.160 Yes - the option expiry is very near - but if the seller is finished in the next couple of weeks then the chart looks ready to explode higher and fast. This is my understanding of the trade, FWIW
  • EO
    Elena O.
    26 April 2020 @ 10:24
    Hi everyone, wanted to ask your help on how you are structuring your short eauro trades? What's the most cost-effective, low risk and high reward to taken risk way to structure it?
    • MJ
      Matthew J.
      26 April 2020 @ 15:14
      Great question, I am a newbie to the space but have been additionally buying EUR put options myself since Raoul said to short GBP & JPY. I have been buying for Jul and Aug 20, also a few different Strike around 1.05 as I'd heard a target of parity. Recently even lower. Also interested if others are doing similar.
    • JW
      James W.
      27 April 2020 @ 14:16
      Hey Elena, I was having trouble with the same question. I use IG for a spread betting account (they offer CFD's as well). IG charge overnight fees just like normal on spot price spread bets and CFDs but they don't charge any overnight fees on their futures or forwards. Instead, they've added the extra fee into the spread so you'll know at the start what your full costs will be. Currently, they're offering a June 2020 contract for EURUSD and June and Sept contracts on USDJPY which it looks I'll be buying. On USDJPY Sept, the spread was 23 pips when I last looked. It's honestly impossible to work out an estimate of what it would cost to hold a trade in USDJPY until Sept (I've spent the last 30 mins trying) so I'm going to assume the forward contract is the best bet. I'll explore the Options option as well and see what comes out
  • NO
    Nicholas O.
    27 April 2020 @ 12:30
    Thanks to all that shared their knowledge here -particularly Steve S, Geoff, Harry, Hugh and Geoff. Very helpful!
    • NO
      Nicholas O.
      27 April 2020 @ 13:55
      Varun was meant to be in there too!
  • JM
    James M.
    26 April 2020 @ 10:37
    Could anyone explain to me why IB are requiring margin to purchase just the 126.5 call? ( I can understand why their system will require margin for selling the 127.5 call) I'm struggling to understand why they insist on it for buying just the 126.5 call on it's own, surely the loss is limited to amount of the premium paid? Their system is requiring 80% of the transaction total as margin.
    • MW
      Max W.
      26 April 2020 @ 12:33
      I have no idea but I'm going to check tomorrow when I enter this trade. I'm using interactive brokers too
    • DH
      Dean H.
      26 April 2020 @ 13:00
      It’s due to SPAN margin requirement, have a google
    • RH
      Rob H.
      26 April 2020 @ 13:50
      SPAN margin is only supposed to apply to options writers. I always thought I wanted an IB account now I’m not so sure. I think I will stick with TD since the TOS trade plateform is great.
    • MS
      Moritz S.
      26 April 2020 @ 14:32
      I assume it's because the underlying is a futures contract. So if you were to exercise the option you would enter into a futures contract which requires a margin.
    • DH
      Dean H.
      26 April 2020 @ 15:14
      See if this thread helps https://quant.stackexchange.com/questions/31383/why-does-buying-future-options-require-margin/31390
    • MP
      Matthew P.
      26 April 2020 @ 15:27
      There is alot of open interest on these contracts now since this release (from a few hundred to now over +20k on IB) worries me of counterparty exercising early or shenanigans to clear out weak hands...
    • DV
      Didier V.
      26 April 2020 @ 16:16
      20.000 contracts is less than 1.4 million dollar. Isn't that peanuts?
    • MW
      Max W.
      27 April 2020 @ 13:54
      Hey I just bought about 155 of the call leg. Interactive brokers required I hold 10 dollars for everyone one dollar I sold of the higher call leg. So now I'm just long the 126.5 call. No calls sold for me
  • MW
    Max W.
    27 April 2020 @ 01:21
    Hey Roaul, will you update your trade recommendation as prices change or as we venture closer to expiration? Just curious :) I'm entering this trade tomorrow and am not sure if I should check back in this comments section for any updates in your recommendation for this trade.
  • JM
    James M.
    24 April 2020 @ 12:23
    Sorry for what is probably a very basic question, re the treasury trade I am on Interactive Brokers & can select ZF Futures Options - then from that select the June 2020 Call with a strike price of 126.50. The ask for this is 0'050 which is throwing me, how does this relate to 4/64? Price is $78.12 for 1 just to check I've got the right thing? I see mention below of buying the 126.5 call and selling the 127.5 call being executed on other platforms as a package but I can't see any package option on IB. Do I just need to put this trade on and then put on a separate trade for the call sell of the 127.5 or am I supposed to be finding a package that puts on both these trades at the same time? TIA
    • DH
      Dean H.
      24 April 2020 @ 12:36
      With IB mobile: Search ZF. Go Spread Template. Choose 22nd May expiry, at the top. Select 126.5 and 127.5 Calls. Click call legs at bottom, make sure the 127.5 call is set to sell. Then order
    • MS
      Moritz S.
      24 April 2020 @ 12:50
      In TWS: select ZF future, then click on option chain and turn on strategy builder. Now you can select your legs of the trade. It will get priced as a package.
    • JM
      James M.
      24 April 2020 @ 15:17
      Thanks for the help Dean and Moritz. that all makes sense.
    • GD
      Gerti D.
      24 April 2020 @ 22:00
      Yes the combination is right (buy the 126.5 call and sell the 127.5 call) but I get no price at all for the combination in IB. There is no bid nor ask. Or the volumes may be too low. The trade seems not too liquid and the fees on IB were astronomic : 44% Not sure if you guys got the same fees or is it just me?
    • MJ
      Matthew J.
      26 April 2020 @ 15:44
      Regarding the Price data, I have found that you might need to check your market data subscriptions or Permissions for the contracts, or just out of hours i guess. Hope it helps.
  • EO
    Elena O.
    24 April 2020 @ 14:30
    Since R is convinced that deflation will hit us in the next 1-2 months, does it also mean that it's time to sell gold and gold miners? They normally negatively correlated. What's the view?
    • IB
      Ivan B.
      25 April 2020 @ 08:06
      Elena, this could be the case and why Raoul hasn’t actioned buy on gold... it’s kinda follows his logic
    • EO
      Elena O.
      26 April 2020 @ 11:00
      but at the same time dollar rates going negative is quite bullish for silver and gold due to Dollar weakening, no? Why? - Cause negative dollar rates should ease Dollar cash demand as a risk off currency - Cause relative to other currencies dollar then will have to weaken due to rates parity condition - Weaker dollar -> supportive of gold and silver normally
    • IB
      Ivan B.
      26 April 2020 @ 14:55
      Dollar is going higher due to shortages worldwide before it will go lower. Raoul is bullish on dollar.
  • AS
    Ash S.
    26 April 2020 @ 05:02
    I appreciate the complexity of this trade! I am now educated on options on treasury futures and feel so much better for it! Keep pushing us!! Thank you Raoul!!
    • EO
      Elena O.
      26 April 2020 @ 10:30
      I learned options theoretically while preparing for CFA2, it's good to have a chance to try them out practically now under professional guidance. This trade already showed me that directional bets are best executed with options, especially when not so many people understand the direction, and thus option prices are cheap, allowing for a great risk/reward asymmetry.
  • ST
    Simon T.
    24 April 2020 @ 07:13
    I see there are a few Saxo users here. I think anyone can listen to their Market Call on Podcast 0830am. Normally talk a little about FX and specifically the EURUSD. Talks about the entry to Short EUR. Nice set of charts to go with everyday. Just change the dates where I have put the 'XX'. https://www.home.saxo/-/media/content-hub/documents/2020/april/2020_04_XX_marketcall_slides.pdf
    • rb
      rohit b.
      24 April 2020 @ 10:35
      Thanks for bringing this to attention Simon - super useful charts, will check their daily podcast as well. Top effort by them for keeping retail investors informed. Not sure about other Saxo users, but I think the platform is decent and intuitive (vs IB from what I hear). Although I will open an IB account as well at some point for my UK SIPP.
    • BH
      Barry H.
      26 April 2020 @ 08:14
      Excuse my ignorance but 8.30 am Frankfurt, London or NY time?
  • FI
    Frank I.
    24 April 2020 @ 10:37
    Hi all, Im based in Australia; can any aussies recommend a platform that has access to the calls recommended by Raoul. (Currently on IG Markets .....has a limited market for options). Cheers!
    • SH
      Simon H.
      24 April 2020 @ 11:18
      IB and Schwab have them. You need a futures account.
    • GY
      Geoffrey Y.
      24 April 2020 @ 11:37
      Saxo Markets Australia
    • IB
      Ivan B.
      24 April 2020 @ 13:04
      Frank, I'm in Australia too and I'm using Schwab account with margin to trade futures/options. @IvanBiletsky
    • BH
      Barry H.
      26 April 2020 @ 08:06
      Hi Frank, I'm in Aust. but use IB like any other international or US investor (and with its margin limitations)
  • KG
    Kos G.
    24 April 2020 @ 08:18
    SUGGESTION! There are plenty of smart people among RV Pro subscribers. Reports and videos here are often hijacked for side questions and discussions. Therefore, I suggest to create some sort of a message board for Pro users to talk to each other!!! Wouldn't it be great?
    • MC
      Melvin C.
      24 April 2020 @ 09:19
      Great idea.. it might keep the discussions cleaner and on-topic to the video itself! @Realvision? Also, once I post a message I usually forget to come back and there is no alert if there is a follow-up comment.
    • KG
      Kos G.
      24 April 2020 @ 09:41
      @Melvin Exactly! If I post or comment I have no idea if/when someone replies back! Or even if anyone has seen my message....
    • AH
      Attila H.
      24 April 2020 @ 13:45
      Yeah I was also thinking how great would that be to have a Forum section somewhere on the site. Also, during the live videos there are great questions, but unfortunately those disappear when the live video ends.
    • AS
      Ash S.
      26 April 2020 @ 04:48
      Awesome, slack channel or something!?
  • SD
    S D.
    25 April 2020 @ 19:00
    Raoul I have a couple of questions: 1. What's your view of the Bitcoin halving. 2. What's your view of the Chinese blockchain rollout. (See Chinese PR: https://www.coindesk.com/chinas-national-blockchain-will-change-the-world) 3. Is a gold-linked crypto RMB the way out for China and the next plank in its economic war against the West? 4. Please can you get Kyle Bass on again soon. thanks.
    • JM
      Jake M.
      26 April 2020 @ 02:21
      regarding 2), my take is that it really defeats the purpose of blockchain de-centralization. According to the article, China seeks to build an infrastructure-of-infrastructures where the underlying infrastructure still controlled by them supposedly.
  • AM
    Artur M.
    24 April 2020 @ 17:59
    I would not buy the spread now as it cost 0.65 It's twice the recommended price and 2 months is not a long time. Hopefully we will have some pull back and get an other chance to get in.
    • DH
      Dean H.
      26 April 2020 @ 02:01
      I believe we are looking at the may 22nd expiry, the day this update was published, this was the only way to achieve near 15x profit.
  • MW
    Max W.
    25 April 2020 @ 23:06
    I've seen very few comments in regards to the analysis. What did you guys think? I think deflation is on the rise too.
  • DT
    Drain T.
    23 April 2020 @ 19:12
    Just ring the broker and say sorry to bother you but i would really like to purchase the Us 5yr T NOTE priced 126.5/127.5 call spread plz. a little bit like placing an order from screw fix lol
    • PC
      Paul C.
      23 April 2020 @ 20:34
      Only a Brummie would get the screw-fix reference!!
    • SS
      S S.
      23 April 2020 @ 20:54
      I'm a Brummie and Proud lol. Loved the Screw Fix reference lol
    • IF
      Ian F.
      25 April 2020 @ 18:13
      What platform are you using in UK? Love the screwfix ref!
    • SS
      S S.
      25 April 2020 @ 21:08
      @Ian. Saxobank
  • IC
    Ian C.
    24 April 2020 @ 15:24
    Love your work Raoul. Regarding the margin on the call spread - IB is requiring margin ~10x (!) the value of the spread. Been up and down IB on this with no luck-- their algo calculates it and that's that. Agree this option approach should require 0 margin. Are others having the same issue on other platforms?
    • MS
      Moritz S.
      24 April 2020 @ 16:10