Bizarrely, schwab has not had a quote on this trade since Monday. I've called them twice and not gotten a great answer, just that it's an error on their system. Anyone else having this issue?

Thank you Raoul for the update .... Hear you loud and clear ...

Does anyone place stop limits on this type of trade (or is it ride or die)? I've been experimenting with utilizing stop limits on equity call options recently, but don't really have any statistically significant results to back up whether or not this is a good risk minimization tool. Thank you in advance.

Raoul and others, does the Fed’s move today to buy individual corporate debt delay the insolvency phase taking some steam out of this trade?

Long time sub/founding member, but retail investor with very limited options experience. Any help greatly appreciated as I can find option chains on SHY, etc, but not on 2 y notes specifically in my Schwab account. I am activated for options, but not futures, if that is the area I need to go to put on trade. A small initial position. Any guidance greatly appreciated.

Thanks for the update Raoul. What would be the price of ZT if we reach a 0% Yield? Thanks Kavi

Just to clarify how would you write the price to pay of 3/64th in broker friendly way? a) 0'025 b) 0'015 c) 0'03 d) other? Thank you

If the risk of rates going higher is not big, why not using futures directly ?

Audio?

RV Fans Slack Channel: It would be great if we had a more direct way to interact as a community, there have been a lot of calls for an open forum we don't have one yet. So I have just setup an unofficial Slack called "RV Fans" we can use to communicate; if it takes off maybe RV will take it over, and if it doesn't work out then no real loss. Request an invite here: https://join.slack.com/t/rvfans/shared_invite/zt-fdx990xs-nJpmfu2dhmCGZq1NlpPiEQ @Raoul & Co if you guys want to take ownership of the Slack team or replace it that is fine with me, you have my email so feel free to reach out :-) I hope this is not a breach of the ToS!

any chance someone could link me to the correct market on Interactive Brokers please? so may markets. thanks

Raoul, what is the ticker for the 2 yr cut 110.5 sept call option on Interactive Brokers please? Thanks

Hey guys, is anyone else concerned that in the daily briefing video Raoul mentioned he thinks there is a higher probability that equity market has turned (60%) than the dollar weekness is over (50%) Cheers, Kavi

Can anybody assist on how do this trade in a Schwab account?

thanks Raoul. would buying say, 20 delta spy be a good way to hedge these trades?

Thanks for the update. Can you please clarify the call spread for the 5 year bond trade you mentioned. I never saw this coming through in a video, your conversation with Julian, and/or the portfolio trades update. I see there are a few of us with the same comment. Thanks

Thanks Raoul, great video. I live in Australia and trade on IG Markets - I can trade Treasury Bonds with CFDs, but not options. Are there any other platforms that I should consider for a pending bond trade using options? Cheers, Mike

There are very strong seasonal patterns (almost to the day) of treasury yields due to predictable changes in the Treasury Cash Balance. 2020 is tracking 2015 VERY closely so far (except for the March crash). Yields seem likely to bottom within the next 2 days (if Thursday wasn't the bottom) and may rise into the end of the month, so the 2-year futures trade could be slightly early. 2020 compared to 2015: https://www.dropbox.com/t/9q6LHV6Bb7g35Ncy Zoomed in, higher fidelity view: https://www.dropbox.com/t/nJNbJRxRN7yf4GRp That being said, we just entered a seasonal liquidity drought period for the equity market (equities tend to correct in June and short-term bottom around the end of the month. In 2018 it was 6/27 In 2017 it was 6/29 In 2016 it was 6/27 In 2015 it was 6/29, but with a recovery early July then a larger fall after. FWIW, DXY also correlates well to TCB, which suggests that DXY is about to rise sharply...

This is the real RV! Thanks. +

I know most of us don't like CNBC but here is the contrarian article. By watching RV we all know why the market is up though economy is not...here is the recap...literally don't fight the FED which is the famous adage since 2009... https://www.cnbc.com/2020/06/13/top-investors-cite-historic-policy-after-markets-return.html I'm still gonna make this trade.

Licking my chops..

You mention Finland and the NL as unwilling to bail out the south. Don't forget Denmark. For me they are most likely to leave the EU next. They also have the advantage of having their own currency.

Great update which I appreciate but have a question which one of the other subscribers may be able to help with. I dont have the ability to trade future so if I want to do this trade will be restricted to call optIons of SHY. Closing price was 86.55 and the last call option trade for Dec 2020 was 86 for 0.55 and 87 for 0.2 and looking back at the past few months the high for SHY was 86.78 at the end of April. I guess my questiosn are: - If rates go to zero what is a reasonable proce for SHY to rise to ? - Is there enough leverage in options as opposed to futures to make the trade worthwhile? Thanks for any and all inputs Donal.

Many thanks Raoul!

Sorry, I misspoke so lets clear this up! The Trade is buying September 110.5 calls on 2-year note futures for around 3/64ths. Zero rates equates to around 110.75. Because these are quoted in 64ths, that equates to a cost of 3/64ths to make a target value of 16/64ths. Negative rates might take it to 111 (which would be worth 32/64th on expiration). I hope that clarifies it. Sorry, one of the issues of recording a video at 9 o'clock at night and rising it out...! I know the translation from bps to 64ths is confusing but its how it is!

🙏

My head hurts. On Saxobank the last traded price was 0’4.0 for the Sep 110’16.0 call. If I were to bid 0’4.0 it would cost $125 premium. Does this mean? a) The 0’4.0 price is 4 ticks, there are 4 ticks in each 1/32. So the break even price is 110 + 17/32. With 7/32 profit for zero rates (24/32). So 7x on the 0’4.0 price. b) The 0’4.0 price is actually 4/32, so the break even price is 110 + 20/32 so only 4/32 profit for zero rates (24/32). So 2x on the 0’4.0 price. c) something else. RP mentions 1/64 as tick sizes, which are either half or double the size of the 1/32 based quote or 1/128 tick size number I am seeing on Saxobank. There is a lot of scope to overpay on this trade, any guidance would be appreciated. Thanks

WHO IS CUTTING HIS HAIR ON LITTLE CAYMAN HE LOOKS LIKE A GOD.

Can hear the gud bois tryin to get sum luv in the office

Hey Raoul, thanks for the update. Just a heads up, the major income for people are the unemployment payments of roughly $5000/month, I don't think the $1200/person really goes that far, enough to pay rent for a month or 2, not factoring for other expenses (which it's already been like 3 months).

Thank you.

Why are we so confident that the rate would have to go to 0 by "September"? Is it simply because of the fiscal policy running out of steam by July? Raoul mentioned that the issuance of treasury would suck liquidity out of market, but then, this also means more supply of treasury forming a resistance floor on the 2 year rate?

@Raoul is it possible that you guys could make a video, or even direct us to a place where we can learn about understanding ticks and how to do the math on these trades? I understand basis points but converting to ticks has been throwing me off. Thank you sir.

Thank you Raoul! I love being part of this community. Please do flash us a 'pile in' note at the right time :). I hope you and the RV team have an awesome weekend mate!

Thanks for the timely update. Do you still feel gold will hold up in a big USD move?

I'm curious why the 2y call rather than the 5y spread used previously. IB shows the former having a 600% return if rates hit zero vs. a 1200% best case return for the spread (also at zero). Are you less confident the 5y goes to zero at this point?

This fractional pricing a is a headfuck. Please can someone tell me if I am on the right track here? A "Tick" in /ZT (2 Year Note) futures is "one-eighth of a thirty-second" of one point rounded to the nearest basis point. So one tick would be 1 divided by 32 divided by 8 or 0.00390625 as a decimal number. A point is equal to $2000 and therefore a Tick is worth $7.8125. The bid for /ZN as a type is 110'111 (110 points and 111 "ticks") which translates to 110.34765625 points or $220,695 per contract. The target strike of 110.5 (decimal) translates to 110'160 (ticks) which is a 39 tick difference from the current bid and gives the contract value at $221,000 (an uplift of $305) - this matches the $7.8125 per tick * 39 ticks nicely. So far so good... The option contracts are spec'd with a "Face value at maturity of $200,000". They are priced in increments of "One-half of 1/64 of a point” increments with 1/64 = 1 Tick. Again a point is worth $2000, which means an "Option Tick” is worth $31.25 or 4 * Underlying Ticks. The 110.5 Aug/Sep PUTs are trading at 0’040 which is 4 “Option Ticks" (not 40 - the third decimal denotes half a tick when it is a 5) which is 0.0625 “points” in decimal and therefore $125 USD per contract. So that implies: * Upside to 110'240 or 110.75 (Zero Yield) is 130 underlying ticks or ~32.5 Option Ticks * Price of the option is 4 Option ticks * Risk reward is therefore 32.5/4 = 1:8 * Cost basis of $125 per contract and would yield $1,015.63 if the target price is hit and maybe more if it goes further Life is so much easier in basis points...

Wondering about the choice of 2 year. How does the risk-reward for 5 or 10 year compares to 2-year? About the same? Is 10-year close to zero more probable (flat yield curve) than negative rates for 2-year? 10 yr. is at 70bp. If 10 year goes to 0, it will move from 138.5 to ~145.5. Call option at 141 costs about .3

I guess I missed it when the ZF turned into a dead play. Anyone know when this was mentioned?

This is my strategy. The 2-Year Options trade priced at 0.045 right now if you want to buy them and pretty much double the premium at the moment than the 99.75 December20 Eurodollar calls. I'm already in EDs. I will wait for a pullback in the 2 Year Options trade to get to 0.025 before getting in. Will go long 2-year futures on a sell off when the S&P rises. Will take my time, won't dive in.

I have recently joined RT pro and can definitely see what RP meant by a community! I had no idea what he was talking about until I read these comments and his explanation. Thank you

Can anyone here provide opinion for US based individual to execute these bond trades, currency trades in IRA, preference to single broker that can provide it all? TD Ameritrade? IB? Pros/cons? Thanks in advance

So, I've bought Sept 2 year treasury futures (ZTU0 on SaxoBank) and 2 Year Sept call options (OZT/U20C) at 1 10'28 (because I couldn't see 1 10'5). Have I screwed up?

Forgive me; you want to buy the 110.5 calls at 2.5 to 3 ticks with a target of zero which you say is 110.5 and an expectation to make 25 ticks? Did you mean buy 110.25, or did you mean zero is 110.75? or am I not understanding why you'd make 25 on the expectation of the underlying meeting the strike? thanks.

Hi Raoul, what do you think about 99.75 December20 ED Strikes? I know there's Libor involved, but time is on your side. Current price is 0.03 and the 99.875s are even cheaper at 0.015. Thank you for your update.

Here's an article explaining futures options and their pricing: https://tickertape.tdameritrade.com/trading/futures-options-trading-15000

Thank you for the update and insights.

ZT is the code for 2 year T-note futures (using IB). ZTU0 is the Sep contract.

Will you post a pdf with the bond trade details?

Thx for bringing up the vaccine showman narrative. Too many people buy into that lullaby of vaccine available in six months!

Now we just need Julian’s take.

Really enjoy these flash updates in video format. Thank you.

Excellent clarity in rationale and execution detail for this trade recommendation. Thank you so much Raoul and team!

Raoul, I don't have access to Bloomberg, what is the price on 2 years if negative 25bps is hit?