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.
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Trade Alert - (TLT)- TAKE PROFITS
SELL the iShares 20+ Year Treasury Bond ETF (TLT) December, 2016 $127-$130 in-the-money vertical bear put spread at $2.97 or best
Closing Trade
12-8-2016
Expiration Date: December 16, 2016
Portfolio Weighting: 10%
Number of Contracts = 38 contracts
I am going to use the monster 2 ? point plunge in the (TLT) this morning to book a profit in my short position.
We only have six trading days left until expiration, and we have already captured 91.42% of the maximum potential profit.
If you look at the numbers below you?ll see that our long went up and our short went down. That is what you want to do all day long.
If you have the ProShares UltraShort 20+ Year Treasury Bond ETF (TBT) keep it. Potentially it could double from here over the next four years.
This was a bet that the iShares 20+ Year Treasury Bond ETF (TLT) would not close above $127 by the December 16th expiration in 23 trading days.
That worked out to a yield on the 10-year Treasury bond of 2.15%, versus the yield then of 2.42%.
I?m sorry, but I just didn?t see a 25 basis point dip in yields going into three interest rates hikes by the Federal Reserve that start in December, and a possible tripling in bond yields over the next four years.
One outcome of the presidential election is that I expect yields on the ten-year Treasury to rise to as high as 6.0% within four years, taking the (TLT) down $50 to as low as $70.
Low risk, high return, I love it!
Open your online trading platform please.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of OptionsHouse.
If you are uncertain about how to execute this options spread, please watch my training video ?How to Execute a Vertical Bear Put Spread?
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.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage.? In today's volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Sell 38 December, 2016 (TLT) $130 puts at????.???$8.00
Buy to cover short 38 December, 2016 (TLT) $127 puts at..?.$5.03
Net Proceeds:????????????????..??.?.....$2.97
Potential Profit: $2.97 - $2.65 = $0.32
(38 X 100 X $0.32) = $1,216 or 12.07% in 18 trading days.
