Tags: gundlach | trade

Gundlach May Cash Out Bond ETF Trade That Returned 22% in a Month

Gundlach May Cash Out Bond ETF Trade That Returned 22% in a Month
(Richard Drew/AP)

Thursday, 06 June 2019 01:56 PM

Jeffrey Gundlach is satisfied with the pitch he gave at the New York Sohn Investment Conference last month. Now, he’s advising investors take profits and close out the trade.

In early May, the co-founder and chief investment officer of DoubleLine Capital LP said interest-rate volatility could not possibly remain as low as it’s been the past eight years.

To turn a profit, he recommended investors employ a put-call straddle on the iShares 20+ Year Treasury Bond ETF, known by its ticker TLT.

In a tweet late Wednesday, he said it’s time to cash out. "TLT put/call straddle idea at Sohn up 22% in the month since. Rare instant gratification. If you put it on, taking it off now makes sense," he said.

Bond yields plummeted and interest-rate volatility spiked last month after trade talks between the U.S. and China fell apart. Bank of America Merrill Lynch’s MOVE Index, which tracks Treasury volatility, rose nearly 50% in May and currently sits at the highest level in 2 1/2 years.

Gundlach weighed in on the swift bond rally last week, too, tweeting that longer-dated Treasury price-action appeared to be consistent with a “blowoff momentum top.” The yield on 30-year Treasury bonds fell from 2.9% to 2.57% in May, the biggest monthly drop in three years. As of 1:01 p.m. in New York, 30-year Treasury yields stood at 2.59%.

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Jeffrey Gundlach is satisfied with the pitch he gave at the New York Sohn Investment Conference last month. Now, he’s advising investors take profits and close out the trade.
gundlach, trade
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2019-56-06
Thursday, 06 June 2019 01:56 PM
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