Sold to open TMF

action

Sold short 200 shares of TMF at $120.46. Total proceeds after commission was $24,084.05, or $120.42/share.

price target

$112.23 represents the low of 6/30, and the post-Brexit week, when the 30-year yield last spiked to 2.3%. This is my first target. After that, $110, the high of the pre-Brexit week.

stop loss

This is a 3x levered ETF, so I have to stay alert. On the other hand, I will give it a bit of rope. The line in the sand is the all-time closing high of $126.31.

time frame/catalysts

The probability of XON busting through my stop loss this week week is slim (13%). The risk of it happening by the end of next week is still only 28%. By that time, I hope to have reached my first target or at least to have sold puts profitably.

Catalysts in my favor should be the unwinding of the Brexit angst, and the (hopefully successful!) initial 2Q2016 earnings reports. If those come in ok, I expect bonds to come under heavy pressure.

rationale

I had closed a covered put against TMF yesterday. As expected, TMF rose some today. But I think this is short-lived. I expect a fairly dramatic increase in treasury yields, as the stock market gains footing. I didn’t see a huge opportunity in the puts today, so I didn’t sell any. I will look again, tomorrow.

July 13, 2016 at 2:51pm · TMF · sell to open · stock


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