Covid cases are declining, and with them, the fear of another disruptive slowdown. Inflation is getting all the press – especially energy price inflation. This increases the odds that the Fed will follow through with its plans to begin tapering purchases of T-bond and T-notes in November. Not surprisingly, 10-year Treasury Note futures are falling. They are testing key support as we write this.
Data Source: Reuters/Datastream
A series of decisive closes below old swing lows at 130-25 in December futures could set this market up for a quick run at our downside target of 128-00. However, failure to break through support could ignite a significant corrective rally. Let’s see if we can put in ourselves a position to capitalize on either scenario.
The December 132-00 put options we suggested purchasing for $516 in our September 3rd blog post are currently going for $1,421.87. RMB Group trading customers who took this suggestion, and purchased more than one, may want to consider exiting half now, taking their original risk off the table in the process. Continue to hold the rest of your 132-00 puts, looking for the December T-note futures contract to hit our 128-00 objective prior to option expiration on November 26, 2021.
We believe inflation will be with us a lot longer so get ready to use any significant bounce from current levels as an opportunity to re-establish a full short position. Prices can and will change, so contact your RMB Group trading professional for the latest.
Please be advised that you need a futures account to trade the markets in this post. The RMB Group has been helping our clientele trade futures and options since 1991. RMB Group brokers are familiar with the option strategies described in this report. Call us toll-free at 800-345-7026 or 312-373-4970 (direct) for more information and/or to open a trading account. Or visit our website at www.rmbgroup.com. Want to know more about trading futures and options? Download our FREE Report, the RMB Group “Short Course in Futures and Options.”
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The RMB Group
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