August 19th, 2009
"This book provides a realistic look at trading commodity options without the textbook theoretical approach trotted out in many options trading books. It is a valuable book for all option traders." ~ Your Trading Edge Magazine, in reference to "Commodity Options" written by Carley Garner
Treasury bull getting tired?
A weak overnight session in equities paved the way for a continuation of the safety bid in Treasuries. However, as the trading volume faded so did prices. At the time of the day session close, the long bond was nearly a handle off of its early morning high.
The U.S. dollar suffered a similar decrease in interest in the "flight to quality "trade which worked against Treasuries. The September dollar index was trading near 78.53 at the 3 pm Eastern close of the official day session and seemed to remove much of the bullish bond sentiment.
The Fed's continues to burn holes in its pockets as it spends the remaining allocated funds to the Treasury buyback program. The Fed purchased $2.599 billion of the $13 billion plus being offered by dealers with maturities ranging from the early to mid 2020's.
Today was a slow news day, but tomorrow should be a bit more exciting on the data front. The weekly jobless claims is normally a second tier report but has been getting a lot of attention (and a decent reaction) lately. That will be released first think in the morning and a little later will hear about the Philly Fed and leading indicators.
We have been looking for a rally in the long bond to 121, and possibly a bit higher. This morning's high of 120'24.5 was extremely close and leaves me wondering whether or not the near-term highs are in or if there will be another run to our secondary target near 121'20ish. Similarly, we have been calling for the 10-year note to see 119 before turning around and although this morning's rally was a respectable effort, it failed to reach our target. Accordingly, we are cautiously bearish from these levels.
Going into tomorrow, we will be looking for an opportunity to sell call options against strength. Perhaps the October 126's in the 30-year...stay tuned.
I apologize for not sending out a newsletter yesterday, I have been swamped with the production of my second book "A Trader's First Book on Commodities", which is now listed on Amazon. If you haven't picked up a copy of the first, "Commodity Options", it is also available on Amazon at a great price!
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
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.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.carleygarnertrading.com/
http://www.decarleytrading.com/
*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.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
