March 27, 2008
**Read my article "Tips and Tricks" in this month's bonus issue of Stocks and Commodities!!!
It was a quiet day in the bond pit as there was little direction in equities and GDP data was reported near expectations. The long end of the curve seems to be under light selling pressure while the short end is consistently holding onto gains to steepen the curve. Some insiders believe that the steepening is the result of traders unwinding spreads in the last two trading sessions.
After a brief drop to 117'23 the June 30 year bond clawed its way higher but failed to end the day session above the 20 day moving average 118'15. Once again, I am an advocate of avoiding a directional play. At current levels, trading becomes a game of "ifs". If the market breaks support we could see 115'31 in the coming weeks, if the market can close above 118'15 tomorrow we could see 120'31 in the coming weeks. Successful trading is about putting the odds in your favor, picking a near term direction in the long bond doesn't seem to be productive.
Don't forget the massive drop in Treasuries last May. While I don't have a crystal ball, a massive drop similar to the one experienced last summer is possible. Aside from two weeks in April, the bond market tends to trend lower from February through May. This market doesn't become a seasonal buy until the beginning of June. I am normally not a bid advocate of buying out of the money put options but this may be something to consider. Contact me for ideas.
Option Recommendations
**There is unlimited risk in naked option selling.
March 12 - Sell 1 May T-bond 125 call for 30 or better.
- March 13 - Buy this back for 10 or less
- You should have been filled on this for a profit of $313 before transaction costs.
Futures Recommendations
**There is unlimited risk in trading futures.
- March 14 - Flat
Carley Garner
Alaron Research Team
800.935.6492
cgarner@alaron.com
www.CommodityTradingSchool.com
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. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. 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.
