IEF Below Fed Funds Rate?

To begin, I am not a Seasoned Trader; I use this blog for:

1. Record keeping; &

2. Formalizing my thoughts

   1. If I can't explain simply here, I shldn't engage

To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ); in this case it may yield a 3.1- 3.94 R/R.

· Asset | IEF ( iShares 7-20 Year US Gov’t Bond )

· Type | Equity

o Alt. Type 1 | Option

· Position | Short

· Entry | $ 100.46

· Stop Loss ( SL ) | $ 102.05

· Bring SL to Zero | n/a

· Target | $ 94.19(-)

· Exp. Time Horizon | ~ x2 FED meetings so Mar-end

· Allocation | 5.00%

· R/R | 3.1- 3.94(+)

To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are:

· I structured it to allow for further moderate appreciation

o I “may” miss hitting the top but I have 1.5 wk’s for that too play out

Now, the reasons I am interested in this position ( the Pro’s ):

· Please see the appendix whereby the 10Y can hover lower than the Fed Funds Rate (Upper) by 100 bps before it turns; we are there now

· The FED is either going to raise (25 – 50 bps) or stay fixed in 1.5 wk’s

o I believe they will raise; thus pushing the market down

· Although the date range for the 10Yr Yield goes further, I am playing with the IEF (ETF) so only goes back to July 2002. Nevertheless, that posts a 1.95 standard deviated move which I’ll see as ~2 if it hits my entry & thus happy with that

To summarize, the Tea Leaves & history is telling me to short albeit I may miss it.

Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money.

Thanks for your time; I hope you have a lovely day.

Appendix I

Appendix II