IEF Short

22 janv. 2023

To begin, I am not a Seasoned Trader; I use this blog for:

1. Record keeping; &
2. Formalizing my thoughts
a. If I can't explain simply here, I shldn't engage

To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ); in this case it may yield a 3.1- 3.94 R/R.

• Asset | IEF ( iShares 7-20 Year US Gov’t Bond )
• Type | Equity
o Alt. Type 1 | Option
• Position | Short
• Entry | $ 100.46
• Stop Loss ( SL ) | $ 102.05
• Bring SL to Zero | n/a
• Target | $ 94.19(-)
• Exp. Time Horizon | ~ x2 FED meetings so Mar-end
• Allocation | 5.00%
• R/R | 3.1- 3.94(+)

To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are:

• I structured it to allow for further moderate appreciation
o I “may” miss hitting the top but I have 1.5 wk’s for that too play out

Now, the reasons I am interested in this position ( the Pro’s ):

• In my blog, you can see the appendix whereby the 10Y can hover lower than the Fed Funds Rate (Upper) by 100 bps before it turns; we are there now
• The FED is either going to raise (25 – 50 bps) or stay fixed in 1.5 wk’s
o I believe they will raise; thus pushing the market down
• Although the date range for the 10Yr Yield goes further, I am playing with the IEF (ETF) so only goes back to July 2002. Nevertheless, that posts a 1.95 standard deviated move which I’ll see as ~2 if it hits my entry & thus happy with that

To summarize, the Tea Leaves & history is telling me to short albeit I may miss it.

Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money.

Thanks for your time; I hope you have a lovely day.