Short term
Trade view / 12 July 2016 at 3:00 GMT

Treasuries look ready for a move lower

Product Manager, Options Trader, Educator
Instrument: ZBU6
Price target:
Market price:

Long-term bonds have appreciated by more than 6.5% following the Brexit vote result, together with equities. We feel that they are now overbought and that they are ready to consolidate and move lower from the current levels of $177.11.

We are buying this two-point vertical put spread 176/174 for a net debit of $781.25.

Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 
Management and risk description

A long vertical put spread is a defined-risk strategy, and as a result our potential losses are limited. For the trade we are risking $781.25, to potentially make $1,218.75.


Buy 1 AUG 16 176 put @ 1"24 or  $1,375 expiration (July 22)
Sell 1 AUG 16 174 put @ 0"37 (37/64) or  ($578)
Net Debit         $797 or 0.51 points 

* prices are quoted in 1/64th of a point or $15.625
** 1 full point equals to $1,000

Maximum gain equals strikes (176-174): net debit equals $1,203

Maximum loss equals net debit, or $797

Entry: today.

Target: at least 80% of maximum profit.

Time horizon: four to five days days.

— Edited by Robert Ryan

For more on bonds click here

Non-independent investment research disclaimer applies. Read more
vsquare007 vsquare007
Do you mind advising the ticket code for the bond to be clear ?
Georgio Stoev Georgio Stoev
Sure- in the option chain of the saxo trader (downloadable) please type in OZB symbol to bring the options for 30-year US Treasuries. This should bring the expiration - we are working w/ 22July.


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