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 Barclay 20+ Year Treasury Bond Fund (TLT) July, 2014 $116-$119 in-the-money bear put spread at $2.80 or best
Closing Trade
5-27-2014
expiration date: July 18, 2014
Portfolio weighting: 10%
Number of Contracts = 45 contracts
We have 75% of the potential maximum profit here. I think we have one more run to the highs in prices and lows in yields to go. Many traders are still talking about my 2.38% target yield for the ten-year Treasury bond. The medium term trend for bond prices is still up.
So I am taking profits on my shorts here so I have dry powder for the next price spike.
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 farther out.
Here are the specific trades you need to execute this position:
Sell 45 July, 2014 (TLT) $119 puts at?????$7.25
Buy to cover short 45 July, 2014 (TLT) $116 puts at..??.$4.45
Net Cost:??????????????????.....$2.80
Realized Profit: $2.80 - $2.25 = $0.55
(45 X 100 X $0.55) = $2,475 or 2.48% profit for the notional $100,000 portfolio.
