TLT Weekly Options Could Be The Call Here
The article below is the latest piece from the Technical Traders discussing 3 investment (relatively) safe havens to consider if you are looking to put money to work in this market. The Technical Trader guys suggest traders consider opportunities in the TLT, XLU and the USD (see below).
Of these three I like the TLT play the most. I’m thinking we’ll probably see further downside in equities over the coming weeks and flows into fixed income type products will remain strong. According to my MarketClub screens, a daily trade triangle was signaled on Friday around $119. I’d consider playing this in one of two manners: 1) purchase shares of the TLT and sell the 123 strike weekly call options against the position to take advantage of 52-week high implied volatility and generate premium income ($0.86 mid), or 2) if you would just like to play the TLT to move higher from current levels throughout the week, consider getting long the deep-in-the-money 118 weekly call options. Using Friday’s closing prices the weekly call options could be purchased for $3.23 (mid).
The 3 Safe Havens — Technical Traders
It seems everyone is looking for a place to put their hard earned money as uncertainty around the globe continues to rise. Oil, Gold, and Silver which have been the hot investments for the past few years took it on the chin over the past month with oil falling 13%, gold dropping 15%, and silver with a whopping 30% decline. We did actually see sharply lower prices, but last week these oversold commodities had a bounce and recouped some of their losses.
It has been a month since I covered the dollar index in detail and back on August 31st I pointed to a potentially large shift in the US dollar. The charts were pointing to a sizable rally which would likely send stocks and all commodities crashing lower. Since then we have seen just that and the so-called safe havens (Gold, Silver, Oil) have dropped taking most investment and retirement accounts down with them. I did talk about these so-called safe havens a couple weeks back stating my point of view on them.
My Cole’s Note Summary: “I do not consider any investment vehicle a safe haven if it can drop 15% in value within 1-2 days. And I would never put a large position of my account especially a retirement account into these investments if I were over 50 yrs of age.”
So where are the big, smart, and conservative traders putting their money to work?
Let’s dig down and take a quick look at the charts…
The 20 Year Bond – Daily Chart:
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