Flash Update – March 23, 2020

Published on: March 23rd, 2020

In this Flash Update, Raoul wants to add a few trades that he has had his eye on for a while.

Comments

  • BJ
    Brandon J.
    9 April 2020 @ 21:35
    Can you advise on whether there is any preference on coupon for bond trades?
  • DR
    Derrick R.
    8 April 2020 @ 18:27
    Is this still happening? My 4/9 and 4/17 TLT calls are getting murdered as the underlying is flat.
  • JW
    J W.
    24 March 2020 @ 14:13
    I am interested to learn why TLT (20Yr + Bonds) is the ETF of choice to participate in the 10 Year. VGLT (10-25 Yr), SPTL (10Yr +) and IEF (7-10 Yr) appear to contain more 10 Yr T-Bonds. There are leveraged ETF's as well, like UST and TYD.
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:09
      I think RP is just super bullish govvie bonds. In which case, the leverage provided by longer duration might outweight the fact that you are further down the curve.
    • np
      nick p.
      29 March 2020 @ 18:06
      from an options perspective, TLT is a bit more liquid than IEF (+ others)
  • JW
    J W.
    27 March 2020 @ 21:41
    The ZNM0 trade is starting to work out very well...how long do we let this run? (the flash update mentions two weeks or so) but things are so volatile, an update would be great.
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:02
      Till it stops working. Trailing stop is a good idea for these kinds of situations. Look at Japan for ideas on how far bond markets can move when there are serious concerns for wealth preservation in financial systems.
    • JW
      J W.
      28 March 2020 @ 15:33
      Thanks Harry
  • FK
    Firoze K.
    28 March 2020 @ 15:04
    Raoul, I'm quite underwater with my long dollar positions at the moment but I'd just like to say that whichever way this goes, I really appreciate and respect all your analysis. At the end of the day, you can't see into the future (although recently have been pretty good at it!) and anyone including myself that takes a trade that you're recommending does so in the knowledge that there are no certainties. Thanks for all your guidance - hope you're not going nuts in isolation!
  • YO
    Yoshitaka O.
    24 March 2020 @ 02:38
    Hi Raoul / Harry Just wondering how you guys actually size your USD and 10y bond futures trades. Say account net asset value is 150k, do you guys buy 150k usd gross exposure each of DX and ZN futures given the relatively low volatility ranges of the prices? Does that look excessive to you? Thanks
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 11:45
      I sized based on an estimate of the move I am expecting and the vol that generally prevails. Also I take into account my upside downside calculation. The latter consideration deals rules out bets where I place my stop such that I dont get a better than 3:1 payout. The former consideration takes into account "slippage". Markets can gap, and one should size such that ones account is jeopardized by a gap. But its part of the nature of the game that once in a while you will size incorrectly, and get a black eye from an adverse move. For some reason toast lands butter side down, and similarly you will find that more of these moves are against you. Or maybe I just remember the moves where the market hurts me better than the ones where it helps me.
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 11:47
      Gross exposure is a bad measure. Use vol, and calculate a daily expected move. Vol/Sqrt(252) or vol/16 is roughly the daily % move. You will get a 2 St.Dev move about 2-3 times per year. So bear that in mind when you are sizing positions.
    • KC
      KEVIN C.
      24 March 2020 @ 22:01
      Harry, Would you mind giving an example of your vol calculation and application as it pertains to 10yr Treasury futures? (And where to/how to calculate the vol on this instrument—just use the TYVIX?). Thanks!
    • RK
      Robert K.
      25 March 2020 @ 06:36
      Any good online calculators out there that would help with sizing decisions? Or, step by step articles?
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:17
      Daily vol = annual vol / 16 (as a percentage) Cos vol = std/(sqrt time) Usually vol is annual - so to convert to daily we just divide by the sqrt of time. In days that's sqrt(number of trading days), which is sqrt(252) = approx 16 This gives you the % daily move. Multiple by, security price for the move in price terms. As for sizing, I would suggest you use common sense first of all. Whats the biggest move you can imagine. Now run that against the security you are interested in. Too big a loss? Whats stop would you set? Can it gap through the stop? I could give you stories about my pathetic attempts to short Tesla which might evoke some sympathy. Or you might just think, "what kind of idiot shorts Tesla?".
  • JM
    Jake M.
    24 March 2020 @ 12:29
    nooby question: can anyone describe in essence the key structural issues supporting the dollar shortage? I know Raoul has mentioned this has to do with the offshore debt. But the fed is trying to counter that with QE and swaplines. How are these not helpful?
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:12
      The dollar shortage happened cos US banks were stretched on their balance sheet utilization. I think there should be a deep dive explaining precisely what happened. We are now watching the Fed try and triage the situation in real time. But the entire global dollar balance sheet has been deleveraging. You need a lot of Fed balance sheet to offset that. So even if the Fed is trying its best to offset that private sector deleveraging, its not guaranteed to be successful in the short term. In 2008, there was a first wave of deleveraging caused by the paralysis of the banking system. Then there was a second wave, when foreigners realized they had huge losses on their dollar securities and needed to sell their local currencies to make pay their dollar account margin calls.
  • JW
    J W.
    24 March 2020 @ 16:51
    ZNM0 is making me dizzy - this thing jumps around like a yoyo :-)
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:08
      Tell me about it! I got stopped on on efforts to buy it. Maybe that tells me more about how bad a trader I am. But even if you have the right idea, it aint easy to keep the trade.
  • AA
    Alex A.
    24 March 2020 @ 16:55
    Thinking about picking up June 162 calls. Any thoughts on this play?
    • AA
      Alex A.
      24 March 2020 @ 16:56
      TLT, btw
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:07
      Keep an eye on the Fed. They are working overtime trying to fix the problem. I would rule out their eventual success. They have a printing press on their side.
  • GP
    Geoff P.
    24 March 2020 @ 17:23
    any thoughts on all the retail hires? bby, hd, wmt, amzn, cvs, dg, etc?
    • JW
      J W.
      24 March 2020 @ 17:44
      Some perspectives. Shifts in the jobs markets. Non-food retailers in Germany report daily losses of 1B Euros and Eurocommerce (Federation representing 6M retailers) is asking for a government bail out. In Belgium 60% of food related companies report labor shortages due to lock downs and the are asking the Government to tap into the unemployed to fill the gaps (FEVIA, Belgium Food Industry Federation). These shifts will increase. Economies are being stretched.
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:06
      Smart observers (Kaplan at Dallas Fed) estimate 12% unemployment by the time this is done. Thats not the most interesting number from my point of view. The most interesting number he game was his year end estimate of 7% unemployment. That suggests a degree of persistence in the real economic recession. Doesnt bode well.
  • DP
    Dimple P.
    24 March 2020 @ 18:41
    Raoul...As you have previously telegraphed, this has been a home run trade from late 2018 into early 2020. I'm sitting out on the last bite of this trade and going all in on the long dollar play...Think it has a much longer runway!
    • DR
      Derrick R.
      24 March 2020 @ 19:28
      @Dimple would you be comfortable sharing a bit about how your trade is implemented? As I go through comments I notice I am not the only person wondering what the timing and target is for this play. I have UUP calls but the devil is in the details, it would be tragic to trade based on a correct theory and still lose due to simple mistake on choice of security, timing, strike.
    • DP
      Dimple P.
      25 March 2020 @ 05:16
      I'm using the UUP Jan 21 $30 calls to build a position. So far only a 1/4 size has been put on and now waiting for more consolidation in DXY to layer in additional exposure. The helicopter money in the coming days will hopefully give us a pause in the DXY to add long exposure. Lets see! Scaling in and position sizing based on individual parameters is key imo. Good luck!
    • DR
      Derrick R.
      25 March 2020 @ 11:37
      I hope this plays out well before Jan... my calls expire Sept!
    • HM
      Harry M. | Real Vision
      28 March 2020 @ 14:04
      Forgive but Im not really familiar with UUP calls. I will look up. I tend to use PhillyX futures, or similar minis. The Fed is doing its best to mitigate the squeeze on dollars right now so keep an eye on Fed moves to establish bilateral swap lines with other central banks.
  • GK
    GRIGORIOS K.
    26 March 2020 @ 09:14
    Raoul can we please get a flash update here?
  • DH
    Dean H.
    26 March 2020 @ 02:56
    Can someone please help me, I am a little confused by differing prices between ZN June futures quoted with my broker/CME, and prices quoted with other 3rd party sites such as yahoo finance etc. E.g. Right now June futures are quoted with my broker and CME at 137.25, but other sources such as yahoo finance say 137.75. Observing the last couple days my P+L is reacting to the change in prices of other 3rd party quotes (yahoo finance), not what my broker/CME is quoting. Can anyone shed some light, sorry if this is a silly/basic question. Cheers, Dean
    • DH
      Dean H.
      26 March 2020 @ 03:42
      Tick size... rookie error, disregard :)
  • AA
    Alex A.
    25 March 2020 @ 17:20
    just fired my first slug out of 10 at TLT june 185 calls, hunting a 1% drop in rates
  • LD
    Lance D.
    24 March 2020 @ 17:05
    ERRR am i the only one that bought hospital beds LMAO
    • JW
      J W.
      24 March 2020 @ 17:21
      No, you are not alone :-)
    • LS
      Larry S.
      24 March 2020 @ 17:47
      You’ve got a good bit of company.
    • LD
      Lance D.
      24 March 2020 @ 18:08
      how long are you guys holding this for cheers
    • JW
      J W.
      24 March 2020 @ 18:13
      ..until someone actually starts ordering these beds ! I mean, we just heard that FEMA can only ship 400 respirators to NY.
  • TC
    Taige C.
    24 March 2020 @ 12:57
    I have more conviction in the bond trade than the dollar trade.
  • LM
    Lawrence M.
    24 March 2020 @ 01:03
    Thanks for these updates, they give me something to focus on and look forward to while my business experiences a mandatory closure :). Hoping that I make more money listening to MI than waiting for something from the government. So far a 5% disaster business loan is all they have to offer US small business owners..with hoops to jump through. Business insurance loss of income will not cover losses due to the Carona. Loss of income, for rental properties, will not cover losses if tenants cannot pay due to Carona layoffs. I heard that Chase/other lenders would defer mortgage payments for the time being for those impacted... called for info and was on hold for 50min, then disconnected. Be careful out there, things are ugly.... already getting texts from tenants saying they can't pay rent and they've only be out of work for two weeks (720 + Fico scores. The gov of Ca was on TV telling people that landlords cannot evict due to the Carona). Very sad, sympathetic to all that are negatively impacted. On a positive note..**these updates are little rays of sunshine, THANKS AGAIN to Raul, Julian, Harry (and the whole MI crew), your hard work is appreciated!!**
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 12:24
      Already getting those texts from tenants? Thats quick.This is a key point. There is a liquidity issue and a solvency issue from a lockdown. I dont see liquidity as an insoluble problem if the Fed does its work. But the solvency issue will still be there. Those tenants who run up arrears may or may not end up paying them. Some definitely wont, and will just move on.
  • CS
    C S.
    24 March 2020 @ 01:35
    For ED futures options - what strike would you think best (or options a poor expression of the trade)? Thanks!
    • CD
      Chris D.
      24 March 2020 @ 02:11
      Be careful on ED calls, there is LIBOR risk in it, it can't get to 99.9 or 100 (assuming 0-0.25% rate bound) as you have to take off implied FRA OIS spread for Dec 2020 (if you buy GEZ2020), and that has been quite volatile recently. It's always at least 10bps, but in 2008 it ballooned to 200bps or so, now Dec 2020 will be discounted to this, it's been about 60-70% of the current FRA OIS spread more recently - you can measure this by looking at the difference between ZQX2020 (which is a PURE rate play) and GEZ2020 which is NOT a pure rate play, it's a LIBOR play. The two contracts above (deliberately Nov 2020 for ZQ as the Dec 2020 contract is after Fed Dec meeting) are also not measured in precisely the same manner, CME's website describes how they are measured. This isn't an issue for longer dates calls, but it's a major thing to bear in mind for current month calls as ZQ = average of the trading days in a month, and GE is a snapshot I know several people who have been wrong footed by this (they contacted me on twitter as I was tweeting about this), they didn't understand the trade properly (but in general they bought in 2019 so they were fine and got out recently at a nice 3-5x profit), they thought Eurodollar was a pure rate play on US rates - it really really really really is not, it's a pure rate play on LIBOR Caveat emptor
    • CS
      C S.
      24 March 2020 @ 02:32
      Chris, thanks for the info. If libor blew out 200 basis points I guess that would mean virtual complete loss of option-capital (whilst that continued). Since the Fed is already going full in generally, what would you think the risk of this occuring over the next 2 weeks? Scale bets accordingly, I take it. Thanks again for your advice.
    • CS
      C S.
      24 March 2020 @ 03:04
      Chris, how *long-dated* might a call have to be to reasonably mitigate this libor risk?
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 11:53
      Chris D makes a very good point. If you are worried about banks, and funding, why wouldn't you be a little worried about whether unsecured funding remains available? Libor is an unsecured funding rate and could potential widen significantly in the CV19 shutdown. Raoul points out that the Fed is committing serious resources to normalizing markets, but there is still some risk (probably small but who knows) they fail.
  • SH
    Simon H.
    24 March 2020 @ 09:38
    Can anyone confirm for me is the TY futures contract interchangeable with ZN? My broker only has TY. Thanks.
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 11:37
      One is a "mini" version of the other. They trade at the same price.
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 11:40
      My mistake - they are exactly the same - just different symbols https://www.barchart.com/futures/quotes/ZN*0/profile
  • AW
    Andrew W.
    23 March 2020 @ 21:28
    If we have the means to do leverage on the 2 year, isn't that a way to squeeze out a little more reward/risk than longer out like 10 or 20 since Fed will have more control of it? In other words, if we can swap duration for leverage, go for it? Or doesn't matter?
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:12
      Yup Take your pick where you think is your best risk reward.
    • DM
      DAVID M.
      23 March 2020 @ 23:12
      I was thinking a similar strategy after seeing, Raoul write, "buying one of the parts of the curve you like for a trade makes sense. I think all parts of the curve work." With favorable probabilities it seems like the perfect time to deploy leverage.
    • SS
      S S.
      23 March 2020 @ 23:17
      @Andrew. This is a fantastic observation. Much more leverage on 2 year and hence can squeeze more juice out of the trade. ZTMO is the ticker
    • DR
      Derrick R.
      24 March 2020 @ 00:20
      @ Steve S Where do you trade ZTMO, I don’t see it anywhere. Even Google search, nothing.
    • DR
      Derrick R.
      24 March 2020 @ 00:21
      How about TYD calls for June?
    • SS
      S S.
      24 March 2020 @ 10:38
      @Derrick. I use Saxobank.
  • TB
    Thibault B.
    23 March 2020 @ 23:15
    Thanks Raoul! Whats up with the ED Jun20s (15 pts under Sep20) ... is the market still anticipating libor issues in the short term? Also, to be clear with ED @ 100 you expect libor-ois to go to 0?
    • RP
      Raoul P. | Founder
      24 March 2020 @ 01:00
      Im expecting minor-OIS to get close to zero. That is what the Fed wants. June is a short period for all the action to be price in
    • TB
      Thibault B.
      24 March 2020 @ 07:18
      Thank you for taking the the time to answer all these questions!
  • DH
    David H.
    24 March 2020 @ 07:16
    Here is an article from Seeking Alpha that asserts that TLT is trading at a significant discount. What is the significance of this and how does it relate to the current TLT recommendation, if at all. https://seekingalpha.com/article/4333772-why-your-supposedly-stable-fixed-income-etf-fell-off-cliff?utm_medium=email&utm_source=seeking_alpha&mail_subject=tlt-why-your-supposedly-stable-fixed-income-etf-fell-off-a-cliff&utm_campaign=rta-stock-article&utm_content=link-2
  • EO
    Elena O.
    24 March 2020 @ 07:01
    TLT is up almost 6%, I do not know how to trade derivatives, so sticking with ETFs for now. Still entering the trade? What's the target for TLT if bonds go to 0% bound?
  • EO
    Elena O.
    24 March 2020 @ 07:01
    TLT is up almost 6%, I do not know how to trade derivatives, so sticking with ETFs for now. Still entering the trade? What's the target for TLT if bonds go to 0% bound?
  • MJ
    Matthew J.
    24 March 2020 @ 06:06
    BTC has had a large sell off as the first option for liquidation from funds, do we see further liquidations in BTC before Gold? Do we know if any funds are still holding BTC that may be liquidated?
  • NT
    Nizar T. | Contributor
    23 March 2020 @ 21:55
    Find it easier to rationalize the dollar when rates are still a bit higher. Anyone have thoughts on the UUP/dollar trade given this massive QE?
    • AW
      Andrew W.
      23 March 2020 @ 21:58
      The rest of the world will do even more.
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:09
      Im still long dollars and the $13trn shortage of dollars offshore is one of the biggest structural issues the world faces...
    • DM
      David M.
      24 March 2020 @ 00:41
      I think long-term, I'm with you, the dollar collapses. Shorter term, dollar funding seems to be a major problem, more than people realize. And I don't think its priced in yet. In addition, I don't think QE will be ending anytime soon, because as much as this is a health crisis, this economy was a bubble long before the coronavirus existed.
    • JM
      Jake M.
      24 March 2020 @ 04:08
      n00b question: What are the key structural issues with dollar shortage?
  • DD
    Derek D.
    24 March 2020 @ 00:16
    How aggressive can we be re-shorting Euros and Yen here? I’ve been covering all the way down. Seems like they’re due for a bounce if you look at Keith McCullough’s risk ranges. Thanks Raoul.
    • RP
      Raoul P. | Founder
      24 March 2020 @ 00:58
      Sure, my view is to try to look through that bounce. When currencies trend, they really trend. We might get a 3% or so bounce in the middle but my time horizon for this trade is longer.
    • SA
      Saad A.
      24 March 2020 @ 03:32
      how long are you thinking? and why? thanks Raoul
  • OT
    Omar T.
    23 March 2020 @ 21:42
    With the fed buying all debt except HYG, it suggests we won't get any more mass forced deleveraging (unless congress completely fails to act on a stimulus). Maybe time to buy gold again?
    • LM
      Lawrence M.
      24 March 2020 @ 00:30
      Julian suggested dipping into silver in his latest flash update (see his recent video). I'm betting Raul and Julian are both waiting for the right time to get back into gold (believe both recommended gold last year, before it spiked up). Bitcoin, the 10yr and the euro dollar (for now), all seem to be a similar play from Raul's camp. Silver from Julian's camp. I've heard arguments, outside of MI, that gold had been overbought and that, perhaps, some will need to sell to cover losses. Patience is probably the most prudent strategy, these guys will give you the green light on gold when the time is right.
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 01:12
      Julian is bullish precious metals. For exactly these reasons. Naturally the other side of this trade is whether there are still liquidation flows out of gold. Cash is very tight right now. A lot of margin calls going on.
  • YO
    Yoshitaka O.
    24 March 2020 @ 00:15
    Hi Raoul / Harry With the fed launching QEinfinity and potentially fiscal, can we assume that implied correlations between stocks and bonds and gold will revert back to normal again?
    • RP
      Raoul P. | Founder
      24 March 2020 @ 00:59
      No idea. I treat each asset class separately in any event. Better for risk management
    • HM
      Harry M. | Real Vision
      24 March 2020 @ 01:07
      In my opinion no. Quite the opposite. My glass is only half full, but the Fed's actions are indicative of a horrible battle with economy wide de-leveraging. The Fed is furiously releveraging to offset the credit system attempts to de-lever. That means different assets might perform very un-intuitively. If there is leverage in a trade go the other way. For example, there is no way Risk-Parity funds have exited their positions yet. You will be right when the financing pressure has mostly corrected. That isnt yet. I will say Julian is quite bullish precious metals. If the spec positions are out (which might be so) the unlimited monetary intervention suggests precious metals might have a long way to go.
  • QM
    Quinton M. | Contributor
    23 March 2020 @ 23:57
    Raoul- i have yet to cover any of my ED since late last year. I have June and sep and dec 2020 and dec 2021. My question is on the June and September 2020. Do you expect them to trade to 100 as well? I’m confused at why they trade at significant discount to December’s. Seems unwarranted given today fed move. Thanks.
    • RP
      Raoul P. | Founder
      24 March 2020 @ 01:01
      June - not sure. Sept yes,
  • ML
    Michael L.
    24 March 2020 @ 01:00
    Raoul, many thanks for your hard work, insights, the trading update and numerous great calls! Very much appreciated. Raoul (or others) Apologies if a bit of a newbie question re bond futures/TLT atm. In the current environment (with high volatility across various asset classes) would options on the bond futures work just as well here, or is there too much embedded volatility, and thus favour buying the futures or TLT outright. Currently a bit challenging to trade futures on my end, thus thinking through ways to maximise leverage/returns whilst ‘capping’ downside. Thank you in advance.
  • JC
    Joseph C.
    23 March 2020 @ 23:59
    Thanks Raoul. When is it time for gold?
    • RP
      Raoul P. | Founder
      24 March 2020 @ 00:59
      Patience, my friend.
  • DM
    David M.
    24 March 2020 @ 00:35
    Hey Raoul, you said "in a nutshell, the Fed really, really, really need to get all rates as close to zero as possible." Why does getting rates to zero unfreeze the credit and treasury market? At least from my minimal perspective, the reason they're involved and trying to push rates down is to prevent yields from shooting up, it seems like that's what the market would be pricing in, minus the fed. Can you explain that to me? Thank you for your insight, as always.
    • RP
      Raoul P. | Founder
      24 March 2020 @ 00:57
      The lower they get rtes, the lower the funding costs on all liquidity providers and the lowers the real rates are. They need to go hugely negative at this point.
  • JM
    John M.
    23 March 2020 @ 21:44
    Negative USD rates...sounds good for gold? I understand there has been a rush to the dollar, but 0 rates and sending checks out seems to make a pretty good case for metals? Could anyone clarify the case against gold for now?
    • LS
      L S.
      23 March 2020 @ 22:26
      John, have asked myself same question... during chaotic dash to QE for everything, forever plus return to NIRP/ ZIRP and liquidation of equities and then bonds, gold was unable to sustain new highs above 1,700. Perhaps last fall in price due to liquidation before pushing higher? I don’t know, but interested in people’s views.
    • DM
      David M.
      24 March 2020 @ 00:47
      Remember, back in 2008 gold fell as well. And it was falling before today, no surprise. In my opinion, the only people selling gold are people who need cash immediately, and gold is a liquid asset they could unload. But everything the fed and govt are doing now is bullish for gold, and as QE4ever continues, I think gold will continue to rally. As a gold owner, it isn't the collapse of assets i'm looking at, but the govt and cb intervention that will force it up.
  • SS
    S S.
    23 March 2020 @ 21:55
    Hi Raoul. Does it matter which 10 Year Futures? June or September, They are priced slightly differently. June being 138'03.0 and September being 137'26.5 Thanks in advance
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:10
      No, front month is find and then you can roll it into Sept in due course.
    • SS
      S S.
      23 March 2020 @ 23:13
      Thank you Raoul. Appreciate your response.
  • YA
    Yaz A.
    23 March 2020 @ 21:14
    Chart looks like we missed the boat.
    • AS
      Alexandru S.
      23 March 2020 @ 21:26
      maybe half of the boat... also any updates on UUP?
    • AW
      Andrew W.
      23 March 2020 @ 21:35
      It was only this morning the Fed announced they will do infinite QE and he was also waiting for confirmation in the charts I guess. Otherwise it could have taken longer to play out?
    • PS
      Paul S.
      23 March 2020 @ 22:49
      Any risk that rates will come back up in the next two weeks from unforeseen market forces?
    • HM
      Harry M. | Real Vision
      23 March 2020 @ 22:53
      Re: Paul S There is always a risk rates rise because of both market forces and unforeseen government policy. These are very treacherous waters.
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:12
      Ive been long bods for the last year in Macro Insiders. I paused for a while and this is a re-entry.
  • MB
    Michael B.
    23 March 2020 @ 21:23
    Raoul - any danger on the eds given the dollar funding issues ?
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:11
      That is why they have been correcting. The Fed are dealing with that.
  • RH
    Roland H.
    23 March 2020 @ 21:48
    Raoul, you have absolutely nailed your ED calls. Thank you! Quick question: It looks like 1-month LIBOR hit a low of ~0.30% in the GFC. Right now the Sep-2020 eurodollar futures are trading at 99.640 - 99.645. Do you expect LIBOR to get to 0 - 10 bps (or at least to have the market price that in during the 2-week+ time frame you mentioned)? Is this basically your call? And thus, 25 - 35 bps of upside (potential negative rates being anything above that)? Much appreciated!
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:11
      Yup. I might be wrong on timing (i.e it could take more than 2 weeks) , but it should get there in due course.
  • BF
    Brad F.
    23 March 2020 @ 21:48
    @Raoul can you suggest a specific contract for the futures trade? I haven't traded them before so it would be comforting...
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:10
      June
  • JF
    John F.
    23 March 2020 @ 21:53
    I want to make sure I have the right futures instrument -- /ZNMO ?
    • SS
      S S.
      23 March 2020 @ 21:56
      Its either ZNMO for June or ZNUO for September. Hoping Raoul can clarify.
    • RP
      Raoul P. | Founder
      23 March 2020 @ 23:10
      Yup
  • PS
    Paul S.
    23 March 2020 @ 22:20
    Being that the Fed has said they will not buy HYG, does anyone see Puts on HYG as still a low risk play? Raoul said he closed out his positions not too long ago, so I avoided it but it has kept dropping consistently. I don’t have much experience with put options so I’m not sure about optimal durations or strike. Thoughts?
    • HM
      Harry M. | Real Vision
      23 March 2020 @ 22:49
      Im not sure I think of them as low risk anymore. Your entry price here doesnt afford good risk-reward. And there are some very cheap pieces of paper out there now. Vol is not low either. Personally if bearish I would be looking at other things.
  • MD
    Matthew D.
    23 March 2020 @ 22:30
    How is liquidity on 10yr futures options?
    • HM
      Harry M. | Real Vision
      23 March 2020 @ 22:37
      Much worse naturally.
  • BJ
    Brian J.
    23 March 2020 @ 22:13
    If the 10 yr goes to near zero and the 30 year goes to 50bps what price does the TLT go to?
  • Bs
    B s.
    23 March 2020 @ 21:48
    Raoul - do you put a Stop Limit on your Futures trades? Would you recommend buying Options on the Futures, or is it better to buy Options on the ETF?