Brilliant!

Sometimes an analysis or thought comes along that is just so brilliant that it astounds you with its clarity and simplicity. The following from Liz Capo McCormick is just such a quote:

April 14 (Bloomberg) -- The dollar isn't the only casualty of the Federal
Reserve's rescue of seized-up credit markets. Bond traders are finding there is nothing special about Treasuries anymore, now that the Fed accepts substitutes for government securities as collateral -- having concluded it wasn't enough to reduce the benchmark interest rate for overnight bank loans six times since September.

Although I was already considering how to play a coming drastic decline in Treasuries, this explains it better than I ever could have. Now that it's out there in the mainstream, I'm going to have to take some drastic and swift action. I believe that the best way to play this is to buy TLT leap puts. I think I'll try to buy on for '09, and one for '10. Because of monetary restraints in the options account, I will probably look at an $80 strike for the '10 put, and then see what I can get for '09, even if I have to settle for a lower one.

Trade: short DCR. I got this idea from Barron's. Here's the reasoning. It seems that a lot of amateurs have been betting on a decline in crude oil. Their favorite vehicle, according to Barron's, is DCR. This ETF goes up when crude goes down. Here's the opportunity: it's trading at 108% of NAV. This is a no brainer to short! On top of that, Barron's reported that DCR together with UCR will be closed and paid out at NAV if oil closes over $111 for three days straight. Not only is this thing selling for more than double its intrinsic value, it comes with a free option on the NAV with a strike price that is out of the money less than the the NAV.