Jeffrey Gundlach at Sohn Conference 2019
The so-called “bond king” and CEO of DoubleLine Capital, Jeffrey Gundlach, recommended investors take advantage of the volatility in interest rates at the Sohn Conference on May 6. As reported by CNBC, he said that investors can express their bet through put or call options in the same strike, or sale price. Gundlach also said that 50% to 75% gains over the next 12 months could easily be made with this trade.
Gundlach’s top trade
Gundlach particularly recommended using the iShares 20+ Year Treasury Bond ETF (TLT) to execute this trade. He added, “I think this is an extremely compelling time to do this trade and an extremely important environment where outcomes are so binary.” He argues that interest rates cannot maintain the low volatility they have over the last few years. So, if the volatility doubles in the next six months, investors should have a 40% gain even if interest rates (BND) stay where they are.
Gundlach’s previous recommendations
Investors, however, should take his recommendation with a grain of salt, as his recommendations at the last year’s Sohn conference have not turned out the way he expected. Gundlach had suggested a long on the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which has returned -26% in the last year. On the other hand, his suggested short, Facebook (FB), rose 9% over the same period.