Posted on January 9, 2023
We’re moving today on a trade inspired by long-time reader José L. from the Netherlands.
It was thanks to him that we had another comprehensive look at the entire credit sector and came up with the following.
No, sir… Just browsing…
We’ve got a finely calibrated initiative for you today, based on the world’s largest junk bond ETF, the iShares iBoxx High Yield Corporate Bond ETF (NYSE:HYG).
The shares have been shellacked over the past year, as one would expect during the first leg down of a bear market.
But things have apparently gone a wee far, and we believe the junkyard pickings are about to find favor in the eyes of investors young and old.
Junk, as you know, trades more in line with equities than the overall bond market, as well as offering a hefty return.
The HYG EFT, for example, is currently handing investors 5.17% annually (pretty darn good), paid monthly—as well as the chance for an additional capital gain.
All in all, that’s a fairly attractive prospect, even if you only hope to speculate on the sector for a quick rebound off the lows.
Our trade, of course, is options based, so the potential returns are magnified.
Today’s bet has the potential to snatch you a 9900% return on an investment of literally pennies.
But first, take a look at the WEEKLY chart, from which you’ll garner a big-picture understanding of why we like junk today.
Consider taking on multiples if you like it.
With kind regards,
Hugh L. O’Haynew