Buying TLT

The last several weeks and especially days, we have seen an enormous leap in yield on US Treasuries (yields move opposite bond prices. TLT is a goof proxy for bond prices on the long end of the curve).

As you know, this violent drop in TLT has many thinking that Yields rise even further and TLT drops even further, but over the last several days I've had a much different opinion and expressed my confidence in it by opening an August TLT call today, one I will likely add to tomorrow. I believe this will be one of the neatest trades out there as the market reverses, but TLT in my view needs leverage, that's why I used August Calls today I also showed a way you can play this idea without options and still have some leverage by shorting an inverse or bear ETF.

I'd like to use even longer dated options for a longer lasting move, but I don't know how much I may trade around consolidations or take profits on big momentum moves, in other words, I really like this trade idea a lot and for a longer term trend.

At first I thought the drop was a head fake move and it still may very well be when the potential upside is considered, a head fake move of this magnitude would be in scale.

The last couple of days I've shown you the evidence that what I believe is actually manifesting, not in price where most traders are looking, but in 3C/ underlying trade.

Given the topic, I thought this article was very timely and it may help you understand why TLT and Treasuries will rise and Yields drop (thus taking the market fown with them.

This research note is from Kessler Investment Advisors, What has happened to long-term U.S. Treasury yields and why they won't stay up here for long