Ultra low risk, low stress way to play the Treasury market


5-year note futures strategy



Ultra low risk, low stress way to play the Treasury market


Market: $ZF_F September 5-year note futures, ZFU2


Buy or Sell?: Buy with purchase of September 124 put for insurance


Range: Trend-line support near 124, and as low as 123'20ish could be an opportunity to get bullish


ZF ZFU12 5-year Note Futures


Reason for trade: We are waiting for better prices to possibly sell puts against weakness in the 30 year bond in light of upcoming seasonal strength in this complex. However, a cheap and limited risk way to get involved in the Treasury market at current levels is a synthetic in the 5-year note. It is possible to purchase a September 124 put for about 8.5 ticks, or $132 and go long a futures contract at 124’04.5. This creates a total risk of $272 per contract before transaction costs, accordingly, if we are wrong it will sting a bit but won’t incur too much collateral damage. The September options only have 11 days to expiration; this is intended to be a relatively short-term trade but offers potentially unlimited reward potential.


In addition to seasonal and technical support, it feels like the current short squeeze in the S&P could run out of steam in the coming days, if so it wouldn’t be out of the question for the 5-year note to retest recent highs near 125. Such a move would result in a profit of approximately $730 per contract.

If you are enjoying this trial, click here to open a trading account to work with DeCarley Trading and/or use the state of the art futures and options platforms available to our brokerage clients.


DeCarley Trading 
This email address is being protected from spambots. You need JavaScript enabled to view it. 


Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.


**Seasonality is already factored into current prices, any references to such does not indicate future market action.


There is substantial risk of loss in trading futures and options. 




Follow Carley Garner on Twitter