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November 25, 2016

I wish that I could have this Short Eurodollar Position and be so deep into South America  again that I couldn’t see what the markets were doing until about April of next year. Together with my general opinion as to the direction and velocity of interest rates for the next 6-9 months (to begin with)…and the possibilities that I EASILY can envision on the chart below…I just KNOW that the best approach from here is to simply LET IT HAPPEN for the next 4-5 months…to neither think too much nor allow myself to create a defined objective due to supposedly “meaningful” events and news that inevitably will occur as this trade unfolds.

The bottom line IS that I think rates are on an upward course that will continue for at least the next few years…and it is quite possible that any given stage of the move can be bigger, and longer in duration, than whatever my ongoing (daily) impressions might lead me to believe…In my experience, markets DO tend to go further than anyone expects (myself included), and although I have frequently referenced 98.00 as a target, I fully understand that “I might be dead wrong” about my targets. And yes, this could mean that I am so wrong that it won’t hit that 98.00 objective, or even 98.50…but on the flip side, it could also mean we are headed for 97.00…which, to me, on this chart, DOES look like a distinct possibility…

I don’t write this to juice up anybody’s expectations…I write it simply to give you my very quick personal perspective as to “how to do this”…

So far, however, I believe we have yet to see any “real” action…that all we’ve seen so far is just a series of small, fairly consecutive downticks…which I believe WILL change…Right now, 2-3 tick daily ranges are the norm…but I think that will soon (any day now) expand to something like 6-8 tick daily ranges as the move lower accelerates…


And here is the put option I continue to recommend at current levels...and am still amazed at this price...just 6 ticks out of the money and with 7 months left to trade ? The dirt cheap price leads me to believe that "Nobody else wants this" (or more put buyers would make it more expensive), which is absolutely the way I like it...


As I have been writing for months, I firmly believe Interest Rates are heading higher…irrespective of the election outcome…And with Trump’s intention to “Build baby build!”, I now believe that the increase in rates is only going to be bigger and faster than I originally anticipated…and the markets seem to agree…


Here’s a longer term look at where rates have been in the past…


And then the short term again…


With everything that is now occurring politically and economically, I honestly cannot imagine anything other than higher rates ahead…I think this move IS in gear…and it is now just a question of how big and fast it is all going to happen.

I’m still buying puts…

Give me a call if you want to talk about it…And please, DON’T wait until you see something officially “definitive” from the Fed. We are trading the FUTURE, which does  involve ANTICIPATING what is going to happen…and ACTING ON IT…before what you have been anticipating actually becomes a reality.  





All option prices in this newsletter include all fees and commissions.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars


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