When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (TLT) – BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November 2023 $76-$79 in-the-money vertical Bull Call spread at $2.60 or best
Opening Trade
10-17-2023
expiration date: November 17, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
We have just been given a nice $1.50 dive in the (TLT) this morning thanks to a failed Treasury bond auction. Look at the charts and we may have a shot at getting a short-term double bottom.
To lose money on this trade 10-year US Treasury bond yields would have to rise above 5.15% over the next 23 trading days, up from the current 4.84%, a bet I am willing to take.
The (TLT) has just suffered a precipitous crash down from $163 all the way to $82 since July of 2020. Similarly, yields have rocketed from 0.32% to 4.84%. The time to go all in on bonds is fast approaching and the big boys are already starting to scale in.
Also helping this trade is sky high bond volatility which is the highest I can remember in many years. That what makes a mere seven day trade profitable.
I am therefore buying the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November 2023 $76-$79 in-the-money vertical Bull Call spread at $2.60 or best
Don’t pay more than $2.75 or you’ll be chasing on a risk/reward basis.
This is a bet that the (TLT) will not fall below $79.00 by the November 17 option expiration in 23 trading days.
Here are the specific trades you need to execute this position:
Buy 40 November 2023 (TLT) $76 calls at………….....………$6.20
Sell short 40 November 2023 (TLT) $79 calls at…....….……$3.60
Net Cost:………………………….………..………….…....................$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.40) = $1,600, or 15.38% in 23 trading days.
It’s now the Opening Act for the Bond Market
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.