So much for negative interest rates. Yesterday, TLT dropped the equivalent of 2 standard devs as yields spiked higher across the curve, and that follows similarly large price changes earlier in November. And bonds are supposed to be the “convervative” investment? Apparently all it takes is a little shiver in the manufacturing sector to send them reeling. TLT isn’t crashing, though. It sold off from the upper level of the range it’s had for the past two months, But it was enough of a drop to push TLT’s IV up a bit. TLT’s IV percentile is 46%, not very high, but high enough to check out some short premium strategies. If you think that TLT will continue to trade in range for the next few weeks, the short iron condor that’s long the 132 put, short the 134 put, short the 143 call and long the 145 call in the Jan expiration with 45 DTE is a neutral strategy that collects a credit 1/3 the width of the strikes, has a 74% prob of making 50% of its max profit before expiry, and that generates $.84 of positive daily theta.
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