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Asked a question 3 months ago

I watch Steve Van Metre on YT and agree with him that interest rates are going to fall (closer) to zero. If I wanted to trade falling interest rates, principally on the US 30 year Treasury could I purchase /ZB PUT option futures to profit from the falling rates? A trade such as: Buy /ZB Put. Strike Price 171 . Expiry 19 Feb 2021 @ 1’21 Cost / Risk USD $1325.00 circa My assumption is: I profit from the trade IF rates fall, but not if rates rise (e.g.) IF say @ 15 Jan 2021 US 30 year Treasury interest rates are lower than today, therefore The /ZB PUT options futures are now ITM, and Any profit is the difference between the PUT option price (cost) today 1’21, and Whatever the price is of the /ZB PUT @ 171 on 15 Jan 2021 Is my assumption right? I’ve traded the markets before but not really in the futures space, hence the question to the group. *I also note that Raoul has indicated to buy March TLT calls, which might be an easier option. Thanks M

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Bond prices and yield are inversely related. As yields fall the price of the underlying bond rises. I would think if you expect yields to fall you would want to be long calls.

Back in March the 30yr June20 contract hit 185 and change as rates bottomed. So I guess with that in mind you would want to be looking at calls with strikes around there or higher.

I watch Steve Van Metre on YT and agree with him that interest rates are going to fall (closer) to zero. 

If I wanted to trade falling interest rates, principally on the US 30 year Treasury could I purchase /ZB PUT option futures to profit from the falling rates? 

A trade such as: 

Buy /ZB Put. 
Strike Price 171 . 
Expiry 19 Feb 2021 @ 1’21 
Cost / Risk USD $1325.00 circa 

My assumption is: 

I profit from the trade IF rates fall, but not if rates rise (e.g.)

IF say @ 15 Jan 2021 US 30 year Treasury interest rates are lower than today, therefore 
The /ZB PUT options futures are now ITM, and 
Any profit is the difference between the PUT option price (cost) today 1’21, and 
Whatever the price is of the /ZB PUT @ 171 on 15 Jan 2021

Is my assumption right? 

I’ve traded the markets before but not really in the futures space, hence the question to the group. 

*I also note that Raoul has indicated to buy March TLT calls, which might be an easier option. 

Thanks M

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