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Trader sees post-election bond collapse continuing — here’s his plan for cashing in

Bonds tanked after Donald Trump's surprising Election Day win, sending the popular iShares Barclays 20+ Year Treasury Bond ETF (TLT) down more than 4 percent, for its biggest drop in more than five years. And one chart-focused trader is looking for a way to cash in should the move continue.

"This is a vote of confidence for the political situation that we're in, and this is something we want to take advantage of with a potential top in the bond market," he said Wednesday on CNBC's "Trading Nation."

Looking at a chart of the long-term bond-tracking ETF TLT, Gordon sees TLT falling below $120, possibly even lower than $118, which hasn't been seen on the TLT since summer of last year. On Wednesday, the ETF fell as low as $124.40.


As a result, Gordon wants to buy the January 120-strike puts and sell the January 118-strike puts for a total debit of $0.39 per share, or $39 per options contract. If TLT were to close below $118 on January 20, Gordon would see a maximum profit of $161. In other words, if TLT were to fall by another 5 percent in the next two and a half months, Gordon would more than quadruple his money off of the trade.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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