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Tony Zhang's HYG Trade

On CNBC's "Options Action," Tony Zhang spoke about iShares iBoxx $ High Yield Corp Bond (NYSE: HYG).

Benzinga · 05/10/2020 19:51

On CNBC's "Options Action," Tony Zhang spoke about iShares iBoxx $ High Yield Corp Bond (NYSE: HYG). He expects the ETF to break above the $80 resistance level because investors are currently seeking yield and the Fed is going to buy ETFs like HYG.

Zhang wants to sell the July $75 put and buy the July $80/$84 call spread for a net zero cost. If the stock closes between $75 and $80 at the July expiration, he won't make a profit, but he won't lose money either. Above $80, he starts to make money and he can maximally make $4, if the stock jumps to $84 or higher. Below $75, he starts to lose money and he is going to have to buy the stock at $75.