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) April 2025 $84-$87 in-the-money vertical Bull Call debit spread at $2.60 or best
Opening Trade
3-14-2025
expiration date: April 17, 2025
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I haven’t bought the bond market for six months, and back then, the (TLT) was $9 higher for a loss. However, now that a recession is firmly on the table, the prospect of lower interest rates looms large. Eventually, the Fed will have to cut interest rates, not next week, but eventually.
Bonds will soar, possibly taking the (TLT) as high as $100.
This trade also gets substantial support from the 50-day moving average at $88.30, which is rising.
I am therefore buying the iShares Barclays 20+ Year Treasury Bond Fund (TLT) April 2025 $84-$87 in-the-money vertical Bull Call debit spread at $2.60 or best.
Don’t pay more than $2.75, or you’ll be chasing on a risk/reward basis.
The only way to lose money on this position is if the US economy absolutely catches on fire and sends interest rates soaring in the next months. As we are on the verge of a possible soft landing, I highly doubt this is going to happen.
This is a bet that the (TLT) will not fall below $87.00 by the April 17 option expiration in 24 trading days.
Here are the specific trades you need to execute this position:
Buy 40 April 2025 (TLT) $84 calls at………….……..$6.50
Sell short 40 April 2025 (TLT) $87 calls at…………$3.90
Net Cost:………………………….………..………….….......$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.60) = $2,400, or 16.00% in 24 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.
