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) April 2024 $87-$90 in-the-money vertical Bull Call debit spread at $2.65 or best
Closing Trade
4-2-2024
expiration date: April 19, 2024
Portfolio weighting: 10%
The (TLT) has just given up its $92 support level. In addition, the stock market is showing generalized weakness. Even though the (TLT) didn’t go our way, we made some money on this position from 20 days of time decay.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) April 2024 $87-$90 in-the-money vertical Bull Call debit spread at $2.65 or best.
As a result, you get to take home $200, or 1.92% in 20 trading days. Well done and on to the next trade.
I’m looking for $110 in the (TLT) sometime in 2024 and maybe even $120. Use every dip to load up on shares in the ETF, calls, call spreads, and one-year LEAPS. This trade is going to work fast. It is the low-hanging fruit of 2024.
Kaching!
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 was a bet that the (TLT) will not fall below $90.00 by the April 19 option expiration in 15 trading days.
Here are the specific trades you need to close out this position:
Sell 40 April 2024 (TLT) $87 calls at………….….............……$5.00
Buy to cover short 40 April 2024 (TLT) $90 calls at…………$2.35
Net proceeds:………………………….………..………….........….....$2.65
Profit: $2.65 - $2.60 = $0.05
(40 X 100 X $0.05) = $200, or 1.92% in 20 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.