Croker-Rhyne Co., Inc.

Main Page  |   Philosophy  |  Current Recommendations  |  Newsletter Archives
Contact Us

August 8, 2006
 
I was putting this together for a few people following today's Fed announcement and then decided I might as well send it out to everybody....Some of it will probably not make any sense but give it a look and call me if you are interested...
 
ON BONDS....
 
Dumb short term impressions...
 
With the action since the announcement, my guess is everybody is already thinking "reversal!"...but today's sort of trade is typical...The herd will continue to think bonds are going nowhere from here...especially with the auction in front of us (which I would love to hear classified as "didn't go well").
 
I think they now have a great shot at "quietly" accelerating out of here over the next few days...Nobody will believe anything on the upside is for real...then start chasing it when bonds get several points beyond the high several days ago.
 
I don't see how they can do anything but go up from here...I mean, what the hell is anybody going to have as an authentic reason to sell more? All the bear crowd will have is just the same rehashed stuff they have been talking since bonds made their low back in May...And they are all already in the trade (and now suffering).
 
If they are going up, They SHOULD begin to move faster now...more vertically that is.
 
I still look at implied volatility and am amazed (chart follows)....With the market trading on its highs, obviously NOBODY believes this thing is for real...
 
Etc., Etc...I think you continue to load up...All we've really done is confirm the bottom over the past few months...Now is when they really can start moving...
 
 
Cheapest I think I can ever recall seeing bond options...With implied volatility having been pressed so low, I would assume this is due to a ton of short options strategies having been taken...and with opinion being as bearish as it has been, I would guess there are some monster short call positions out there...I have seen the same situation before (in bonds specifically) where the market got really explosive as the market rocked through 2 or 3 strike prices (forcing futures buying) that short sellers never dreamed would be threatened...
 
 
And for more leverage, but much less time, there are the October options...
 
 
Thanks,
Bill
866-578-1001
770-425-7241
Main Page   |  Philosophy  |  Current Recommendations  |  Newsletter Archives 
Contact Us