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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(TLT)
Buy the iShares Barclay 20+ Year Treasury Bond Fund (TLT) July, 2014 $118-$121 in-the-money bear put spread at $2.55 or best
Opening Trade
5-29-2013
expiration date: July 18, 2014
Portfolio weighting: 10%
Number of Contracts = 39 contracts
We?ve just had a four point run in the latest leg up in the incredible bull market in bonds. We could be in for some month end profit taking. The upper $118 strike works out to a 10 Year Treasury Bond yield of 2.27%.
As long as yields stay above that by the July 18 expiration, we will keep the entire profit on this trade. Better yet, get a three point dip anywhere along the way and we will immediately reap 75% of the profit, as we did with our last (TLT) bear put spread.
I think this week flushed out a lot of the hotter short term money from the market in the humongous short squeeze that I warned you about. Positioning is now flatter. Mad Day Trader Jim Parker also thinks we could be in for a major trend reversal with next week?s Friday nonfarm payroll report.
In the meantime, the (TLT) could rise as much as a point higher to $116. That still gives me plenty of breathing room with this position, which has a breakeven point at $118.45, or a ten year Treasury yield of 2.25%. That sounds like a pretty good bet for me, now that we are headed into the slower summer months.
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:
Buy 39 July, 2014 (TLT) $121 puts at?????$6.90
Sell short 39 July, 2014 (TLT) $118 puts at..??.$4.35
Net Cost:??????????????????.....$2.55
Potential Profit: $3.00 - $2.55 = $0.45
(39 X 100 X $0.45) = $1,755 or 1.76% profit for the notional $100,000 portfolio.
