Dec 27. Remember the dot.coms?

Dec 27. Not much change in interest rate futures.  Volume was light, though there were some large bearish option plays.  Ten year yield stopped just shy of 3%, closing at 2.99.  While most of the attention in puts has been paid in greens, yesterday the interest was slightly further out the curve.  For example, Blue March 9737/9700/9662 p butterfly was bought 20k (paid 9 covered 33).  Feb Five Yr 119/118.25/117.5 put fly was bought 15k for 7.5-8.0.  FVH 119/117.75 p 1×1.5 bought 10k, 16-16.5.  All new positions.  And in tens, bought TYH +20k 121/123ps, +20k TYH 125c, -40k TYG 125.5c as a package (31 for 20k, exit of the Feb calls).
–Interesting note on ZeroHedge saying that at $40 billion in market cap, Twitter now is valued at a higher level than 80% of S&P 500 companies.  Revenue is just over $1 billion, and I skimmed a few articles that say the company may make $200 million in 2015.  As a comparison, if you put $40 billion into the five year note, you would get $700 million in yield each year, starting instantly.  And in five years you will still have the $40 billion in principal.  So, the Fed is buying the latter in an attempt to push the public into riskier assets like the former, in order to strengthen the foundation of our economy through the “wealth effect.”  Happy New Year?

–If you are reading this post on the TJM website, please note that I have changed firms and am at RJ O’Brien.  Please contact me directly for interest rate trading ideas.  Alex Manzara

Posted on December 27, 2013 at 5:45 am by alexmanzara · Permalink
In: Eurodollar Options

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