TLT Long Put Spread

How long will this “Powell Pump” last? The bond market is buying into the low-rate story quite literally with /ZB and /ZN rallying yesterday on the strongest volume they’ve seen in a couple weeks. All bond and note prices are inversely related to interest rates, but the longer the bond’s maturity, the more sensitive it is to changes in rates. Looking at the 3×1 NOB spread, the /ZN has been outperforming the /ZB, which suggests that the 10–year rate has been dropping more. Rather than finessing the NOB spread though, you may just want to bet against the low-rate mindset and consider an outright bearish position on Treasuries. As far as maturity goes, TLT’s portfolio splits the difference between the 10-year note and 30-year bond with a maturity of just over 17 years. TLT is sort of a happy medium. So, if you’re bearish on TLT, you might consider a the long put vertical that’s short the 121 put and long the 123 put in the March expiration with 44 DTE as a bearish strategy that has a 66% prob of making 50% of its max profit before expiry.

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