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)- TAKE PROFITS
SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT) March, 2017 $124-$127 in-the-money vertical BEAR PUT spread at $2.97 or best
Closing Trade
2-21-2018
expiration date:??March 16, 2018
Portfolio weighting: 10%
Number of Contracts = 38 contracts
I think we have pretty much squeezed all the juice out of this lemon. Capturing a three-point plunge in the bond market in only nine trading days we have earned 91.42% of the maximum potential profit in this position.
The risk reward of continuing is no longer favorable. Better to raise cash here so we can resell on the next two-point bond market rally.
I am therefore selling??the iShares Barclays 20+ Year Treasury Bond Fund (TLT) March, 2017 $124-$127 in-the-money vertical BEAR PUT spread at $2.97 or best.
This was a bet that the United States Treasury Bond Fund (TLT), would not trade above $124 by the??March 17??expiration date in 27 trading days, compared to the then current $121.80.
Providing the massive tailwind for this trade was the surprise decision by congress to increase deficit financed spending this year by $300 million. Unexpectedly increasing supply in a falling market has a terrible impact on prices.
Yes, we are becoming the United States of Debt and I plan to milk this trade for all its worth. This is going to be the trade that keeps on giving.
If you have the ProShares Ultra Short 20 Year Plus Treasury Bond Fund (TBT) keep it, even though you have earned a hefty 18.18% profit in only two months. Bonds are going much lower.
Here are the specific trades you need to exit this position:
Sell 38 March, 2018??(TLT) $127 puts at????????????.?????????$9.75
Buy to cover short 38 March, 2018??(TLT) $124 puts at..???.$6.78
Net Proceeds:?? ???????????????????????????????????????..??????.???.....$2.97
Profit: $2.97 - $2.65 = $0.32
(38 X 100 X $0.32) = $1,216 or 12.08% in 9 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
