How to get short on treasurys via an ETF
I'm trying to mimic a short sale of treasury bonds but I'm a small personal investor without direct access to OTC markets. I was searching for an ETF that would be bearish on treasuries and I settled on an ETF that is described as:
"The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Barclays Capital 20+ Year U.S. Treasury index. The fund normally invests at least 80% of assets to investments that, in combination, have economic characteristics that are inverse to those of the index. It also typically invests in taking positions in financial instruments, including derivatives that should have similar daily return characteristics as twice the inverse of the index."
Do you think that this is an effective way to short treasurys via an ETF?
Convertyourbond did a similar shorting of long term treasurys IIRC. If you're reading this, do you think this reasonably mimics your trade?
Thanks in advance for any help you can offer.
exchange traded futures. ETF's (exchange traded funds) something different. Basically CBOE has futures contracts on the 2/5/10/30 year treasuries that you can use.
1) I only see S&P 500 futures on the CBOE site? Do you know of the symbol for the treasuries? (don't know why I kept misspelling that earlier) Also, I would imagine these trade in fairly high denominations?
2) I was actually looking for an exchange traded fund originally. I don't invest a lot of money and they are easy to trade and very liquid obviously. Could I still solicit your thoughts on TBT? (the ETF I mentioned above) I'm just trying to make sure that I'm betting on what I think I'm betting on.
How much cash are you going to put on the trade? If its enough you might just want to use the futures market.
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and btw with TBT you are betting yields will go up (prices down) so it is a way to short the long end of the yield curve.
Good. That was my intention. I will have to figure out your point about geometric averaging. Could you maybe elaborate? I suspect TBT is different because it is attempting to track the inverse of an existing index?
Also, to Revsly. I'm talking about an investment of three figures. Poor college kid...
http://www.indexuniverse.com/sections/features/6163-ultrashort-treasuri…
Not sure why people bother to trade with so little money. Even if you make great returns, its chump change. Why not just enjoy the money while you're in college and work hard so you can get a job that will make u gobs more (even in a junior role) than you could hope to make trading so little cash?
Dignissimos soluta est ut voluptates eos commodi. Pariatur sapiente eaque fugit aut.
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