A surprise drop in consumer confidence reversed early morning weakness in Treasuries but the bulls struggled to keep momentum. While the recent trend has been higher, bonds and notes face significant resistance.
According to the Conference Board, their confidence index fell to 53.1 in September after posting 54.5 in August. Analysts were expecting an increase to 57. Consumer confidence levels are near the worst levels since the early 1990's. The negative news from the Conference Board overshadowed a better than anticipated Case-Shiller Housing index. According to the index, July marked the 6th consecutive increase in home prices.
Event risk remains elevated throughout the week, so it seems reasonable to expect an increased amount of volatility and fickle trade. We tend to believe that the Treasury market will be finding a relatively meaningful high in the coming week or weeks. The seasonal tendency in this market is for a downturn in early October that lasts approximately three weeks.
Thus far our primary resistance areas of 121'27 in the long bond and the mid 118's in the note, have held. While we prefer the downside, we still acknowledge that there is risk of a spike to 123ish in the 30-year bond and 120 in the note.
Our clients were recommended to sell the December 129 calls for about 20 ticks, but it just wasn't meant to be. The high of the day was 19 and some even tried to adjust the price a bit lower but weren't able to get a fill. We will be working the same order tomorrow but it may be necessary to adjust strike price and premium.
Of course, it is possible to get much more aggressive with this. One idea would be to sell a much closer strike price and another would be to use the proceeds of a short call to purchase a long put.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations **There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations **There is unlimited risk in trading futures.
Flat
A surprise drop in consumer confidence reversed early morning weakness in Treasuries but the bulls struggled to keep momentum. While the recent trend has been higher, bonds and notes face significant resistance.
According to the Conference Board, their confidence index fell to 53.1 in September after posting 54.5 in August. Analysts were expecting an increase to 57. Consumer confidence levels are near the worst levels since the early 1990's. The negative news from the Conference Board overshadowed a better than anticipated Case-Shiller Housing index. According to the index, July marked the 6th consecutive increase in home prices.
Event risk remains elevated throughout the week, so it seems reasonable to expect an increased amount of volatility and fickle trade. We tend to believe that the Treasury market will be finding a relatively meaningful high in the coming week or weeks. The seasonal tendency in this market is for a downturn in early October that lasts approximately three weeks.
Thus far our primary resistance areas of 121'27 in the long bond and the mid 118's in the note, have held. While we prefer the downside, we still acknowledge that there is risk of a spike to 123ish in the 30-year bond and 120 in the note.
Our clients were recommended to sell the December 129 calls for about 20 ticks, but it just wasn't meant to be. The high of the day was 19 and some even tried to adjust the price a bit lower but weren't able to get a fill. We will be working the same order tomorrow but it may be necessary to adjust strike price and premium.
Of course, it is possible to get much more aggressive with this. One idea would be to sell a much closer strike price and another would be to use the proceeds of a short call to purchase a long put.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
