On CNBC’s “Options Action,” Tony Zhang spoke about iShares 20 Plus Year Treasury Bond ETF (NASDAQ:TLT). It has recently broken out above $146, and on Friday it came back to retest that level as support. It managed to bounce off the support, so Zhang thinks bonds are going higher just as yields are heading lower.
He wants to use an options structure that is not reflecting a strong bullish outlook. It is more of a non-bearish strategy. He would sell the October $148/$143 put spread for a credit of $1.86. The trade breaks even at $146.14, or 1.62% below the closing price on Friday. It can make a maximal loss of $3.14 in case TLT drops to $143 or lower.
