Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : U.S. 30 year bonds Overpricing -- Ignore unavailable to you. Want to Upgrade?

To: oilfinder who wrote (3)	10/20/1998 9:05:00 PM
From: John Soileau	Respond to of 5

dear mike, this isn't for the faint of heart. call your broker. i used smith barney. The TYX options are derivatives based on the interest rate of the 30 yr. u.s. treas. bond. For examply the TYXCJ is a march 50. The owner of this call option would think long term rates are headed up from 4.98 percent today (called 49 in put language) to let's say 5.5 or 55. If such a thing happened in a short time, and you sold, you'd make some money. I sold mine two days after the post because long term rates went up to 5.15% and the put went from 2 to 4. I actually sold at 3 because I couldn't get my trade in quick enough. Don't do this, just read about it and maybe, if you feel lucky buy a call. No guarantees. Oh, if rates fall, then your money's gone quickly. In our example however you have until march, 99 for rates to go over 5.0% on the long end. Watch out for "time decay"- the half life of an option is often measured in hours. I've mostly lost money playing options. Hope this info helps. John