As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (TLT)
Sell the iShares Barclays 20+ Year Treasury Bond Fund (TLT) February, 2014 $108-$111 bear put spread at $2.67 or best
Closing Trade
2-5-2014
expiration date: 2-21-2014
Portfolio weighting: 10%
Number of Contracts = 39 contracts
Taking a profit on this position in from of tomorrow?s epic nonfarm payroll. That way, if a great flock of black swans deliver us a bad number and the earth crashes into the sun, we walk away laughing, with minimal capital at risk. This is a time when a bird in hand is worth a dozen in the bush.
On top of that, the 200-day moving average, formerly resistance and now support, may ignite a bounce on the first visit down. Of course, if we get a fabulous nonfarm number tomorrow we will be leaving money on the table. But this is your classic ?take the money and run? market.
On top of all these considerations, we have only 10 trading days left until the February 21 expiration. There is not enough time for things to go wrong one more time and then get right. Those holding the ProShares Ultra Short 20+ Year Treasury ETF (TBT) might also consider taking the quickie $3.45 point pop off the bottom and getting back in on the next panic.
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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.
Here are the specific trades you need to execute this position:
Sell 39 February, 2014 (TLT) $111 puts at?????..?$4.40
Buy to cover short 39 February, 2014 (TLT) $108 puts at?$1.73
Net Proceeds:????????????....??..??.......$2.67
Profit: $2.67 - $2.55 = $0.12
($0.12 X 100 X 39) = $468 or 0.47% for the notional $100,000 model portfolio.
The Fat Lady Is Singing for the Bond Market
