When stocks are down, bonds are down and the dollar is down, it is hard to pass up a chance to take a trade in favor of rising yields.
The best way to do that is with a bearish trade on iShares Invest Grade Corp. Bond ETF (LQD). This ETF holds high-quality corporate bonds.
LQD saw a 2% drop last week, and has broken out below a rising wedge pattern. That is a bearish signal that should continue to play out as investors look for opportunities outside the bond bubble. Although the options on LQD have been actively traded, liquidity (despite the name) is a little low.
Volatility is rising, but the options are still priced in an acceptable range.
Recommendation: Buy to open the LQD September 112 Puts (LQD130921P00112000)
InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next trade and get 1 free month today by clicking here.