Sunday, October 16, 2011

Revisiting buying PUT options on TLT

Over a year ago I thought about buying PUT options on TLT expiring on Jan 20,2012 for 2.6$/share.Basically this investment would have had a huge payout if we had a runaway inflation and interest rates went up significantly on government bonds.

Looking back that investment would be worth 0.13$/share....a loss of 95%.

But I think betting against treasury bond yields is still a good idea. In my perfect world I would buy a TLT PUT expiring in 2022 but nobody is willing to sell that long dated PUT option.

So here is an investment which makes all the sense in the world ....but you just need someone willing to take on the opposite side of the bet.

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