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Strategies & Market Trends : Stock Mania ! - Mutual Funds that can short.
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To: kahunabear who wrote (65)5/5/1998 11:40:00 AM
From: Knighty Tin  Read Replies (1) of 129
 
Whip, I would and am buying puts on T-Bond futures. They are cheap and I don't think U.S. bonds are going much higher. But I wish I could buy puts on junk bonds. That is the most overpriced part of the fixed-income market. They are getting junkier, yet the spread between T-bonds and junks is about the lowest it has ever been, both absolutely and percentage-wise. I am shorting leveraged junk bond CEFs that are selling at premiums in my maximum income accounts, but that is a paired trade. I am holding unleveraged discounted investment grade or govt. CEFs as an asset against this trade. The theory is that the spread should widen, there are too many junk CEFs being registered, and the discount on the asset should decline while the premium on the short should decline. However, I've had this position on for awhile and so far I am treading water, collecting my short rebate to pay for the difference in payouts. And these junk boogers are hard to borrow. MB
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