T-Bond Bear Vehicles

[haha]

First- this is a brainstorming post. I want all the suggestions that anyone can think of.

What I have thought of so far is to do a straight short sale of an ETF like TLT, buy puts on this issue, or buy a short or ultrashort bond ETF. The short bond ETF I think is a bad idea because of tracking error- they seem to chew up share price even when the position is not going against you.

Another possbility would be to use futures on the CME, or puts on financial futures.

Anything else come to mind?

Ha

 

[brewer12345]

RYJUX, which I believe uses futures.

 

[kyounge1956]

First- this is a brainstorming post. I want all the suggestions that anyone can think of.

What I have thought of so far is to do a straight short sale of an ETF like TLT, buy puts on this issue, or buy a short or ultrashort bond ETF. The short bond ETF I think is a bad idea because of tracking error- they seem to chew up share price even when the position is not going against you.

Another possbility would be to use futures on the CME, or puts on financial futures.

Anything else come to mind?

Ha

Gosh, I sure wish I understood what you just said

 

[kumquat]

Wait for a bond version of this?

Ok, I'm just kidding.

 

[Maurice]

There are Euro-denominated CDS on US government debt.

(since we're just brainstorming, after all, its not likely a retail investor could buy one)

 

[brewer12345]

Maybe you could short or buy puts on something like NLY. They go long fixed rate agency MBS and lever up 5 times or better with floating rate financing. But the dividends would make this costly.

 

[FIRE'd@51]

Have you looked at these? They are European-style, cash-settled, and you don't need a futures account to trade them.

You can create a synthetic short future by selling the call and buying the put.

And, perhaps best of all, you don't have to understand "cheapest to deliver".

 

[Dawg52]

Gosh, I sure wish I understood what you just said

Me too. I think I will just stick to doing what I do best, losing money.

 

[ziggy29]

If I shorted Treasuries, it would be a guarantee that a double dip recession was on the way.

 

[haha]

Thanks for all the sugestions. I found that the CBOE also sells listed options on various interest rates. I'll work out tracking, liquidity etc. over time. Don't know if I will do this or not, or how I would time it if I did, but I wanted to have my vehicles ready to go.

My lifetime history of bear bets is about 2:1 against me. Usually I get the market vulnerability right, but give up before the payoff because my timing is premature.

Ha