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Bond Market Update: Is Now the Time to Buy?

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ticker lesson

Breakdown

0:00ZBZ6· ticker

ZBZ6 — tactical swing trade, long bonds oversold

  • 30-year Treasury bond futures contract
  • ZBZ6 represents $100,000 face value
  • One full point = $1,000 per contract
  • Minimum tick = 132nd of a point = $31.25
1:42ZB· ticker

ZB — long bond sensitivity to yields

  • ZB more sensitive to interest rate changes
  • Yields fall → ZB moves quickly
  • Yields rise → ZB downside violent
  • Duration sensitivity key factor
3:17lesson

Call spread vs short put spread payoff profile

  • Short put spread risks $750 for $250 gain
  • Call spread risks $218 for potential $78125 payoff
  • Call spread better for managing risk
  • Avoid overexposure to falling market
3:18CFTC· ticker

CFTC — extreme short positioning in bonds

  • Speculators hold extreme short levels
  • Historical lows in bonds in October 23
  • Market saturated on downside
  • Catalyst needed for bounce
3:19lesson

Managing a call spread trade

  • Defined risk of $218.75
  • Goal is to capture swing higher
  • Not to call the exact bottom
  • Take profit if price bounces

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