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) December 2023 $95-$98 in-the-money vertical Bear Put spread at $2.60 or best
Opening Trade
11-8-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
We have just been given a nice $8.00 pop in the (TLT) this morning thanks to massive short covering triggered by comments from the Federal Reserve and a wildly successful Treasury bond auction. Look at the charts and we are confirming long-term double bottom.
However, I don’t believe we are going to see a total $15.00 gain in 26 more trading days. That is what would be necessary to lose money on this trade. If yields did drop down to 4.20% by the December 15 option expiration will think you died and went to Heaven.
I am therefore buying iShares Barclays 20+ Year Treasury Bond Fund (TLT) December 2023 $95-$98 in-the-money vertical Bear Put 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 rise above $95.00 by the December 15 option expiration in 26 trading days.
Here are the specific trades you need to execute this position:
Buy 40 December 2023 (TLT) $98 puts at………….………$9.00
Sell short 40 December 2023 (TLT) $95 puts at….………$6.40
Net Cost:………………………….………..…………...........….....$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.40) = $1,600, or 15.38% in 26 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.
