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) SELL TAKE PROFITS
SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT)September, 2017 $129-$132 in-the-money vertical BEAR PUT spread at $2.87 or best
Closing Trade
8-16-2017
expiration date: September 15, 2017
Portfolio weighting: 10%
Number of Contracts = 38 contracts
Since we added this position four trading days ago, ten year Treasury bond yields have popped from 2.19% to 2.275%.
My short position in US Treasuries performed it role as a hedge very nicely for our RISK ON positions in (AAPL), (GDX), and (ABX).
This means that we have captured a very nice 67.5% of the maximum potential profit in our position. The risk/reward of carrying on is now greatly diminished.
I do want to have the dry powder to sell short more Treasuries in the event that the stock market takes another rally, and bonds dive, a strong possibility.
August isn't over yet, and then we have September.
I am therefore taking profits in my position in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) September, 2017 $129-$132 in-the-money vertical BEAR PUT.
A healthy 10.38% in four short days is nothing to sneeze at.
Selling also gives us the luxury from a risk perspective of running our remaining (TLT) August $128-$130 vertical bear put spread into the Friday option expiration and keep the entire profit there.
If you didn't do options, and bought the ProShares Ultra Short 20+ Treasury Bond Fund (TBT) instead, keep it. Bonds are going much longer over the long term.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off from Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on "How to Execute a Vertical Bear Put Spread"by clicking here at
http://members.
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.
Here are the specific trades you need to execute this position:
Sell 38 September, 2017 (TLT) $132 puts at...............................................................$7.30
Buy to cover short 38 September, 2017 (TLT) $129 puts at........................................$4.43
Net Cost:.........................................................................................................................
Profit: $2.87 - $2.60 = $0.27
(38 X 100 X $0.27) = $1,026 or 10.38% in 4 trading days.
