January 8th, 2009

Position squaring ahead of jobs numbers.

I think that we will all agree that government policy and excessive volatility have made Treasury speculation even more challenging than it previously was...and it has never been easy money.  However, the sudden rise and fall seem to have made price predictions even more challenging.  One thing is certain; the tight trading range witnessed in recent days likely won't last.  However, if you are thinking of buying strangles you may have missed your chance as option premiums seem to be enhanced by others with similar notions. 

of overly optimistic estimates as opposed to an improving jobs market. 

With expectations for non-farm payrolls at dismal levels, it appears as though the Treasury market may have a tendency to trade lower following the announcement.  However, I can't help but feel that if we do see early morning selling pressure that losses will be pared as the day goes on.  In fact, we could see a sizable bounce in Treasury futures with the premise of a counter-trend Friday theme. 

If you are following the Eurodollar recommendation below, it seems as though the March futures are destined for levels near 99.15 in the coming days.  At which point it may be a good idea to take a profit on the long call and hold on to the short futures contract. 

On a side note, a client of mine was kind enough to send a Chicago Board of Trade Treasury Bond Futures Yield Calculator from years ago.  They are no longer available, but look as though they would be a great tool for speculators.  If anybody from the CBOT or CME Group is reading this, please consider bringing it back as a promotional item.  For those of you that would be interested in having one, perhaps we can encourage their production by emailing inquiries to the exchange.

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

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

December 17 - Clients were recommended to Sell March futures near 98.84 and buy the March 9875 call for 21.  The total risk is $300 plus commissions and fees (2 of them), profit potential is theoretically unlimited, and this trade gives you three months in the market!

·         If prices rally to 9915, this may be a good opportunity to liquidate the long call at a profit and hold onto the short futures contract. 

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.