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.
Trade Alert - (TLT)
Sell the iShares Barclays 20+ Year Treasury Bond Fund (TLT) January, 2014 $104-$107 bear put spread at $2.70 or best
Closing Trade
1-15-2014
expiration date: 1-17-2014
Portfolio weighting: 10%
Number of Contracts = 38 contracts.
With two days to expiration I am getting out here at cost. That allows me to avoid the fun and games, and the risks that come with manipulating the Friday close for the (TLT). Better to stay out of the battle of the Titans, between the longs and shorts, lest you get trampled underfoot. You don?t want to accidently go long a wad of Treasury bonds over the coming long weekend, even in your worst nightmare.
I?ll be back in this trade shortly, as soon as we get another decent dip. Selling short Treasury bonds is going to be one of the recurring trades of 2014.
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 further out.
Here are the specific trades you need to execute this position:
Sell 38 January, 2014 (TLT) $107 puts at?????..?$3.00
Buy to cover short 38 January, 2014 (TLT) $104 puts at?$0.30
Net Cost:????????????....??..??.......$2.70
Potential Profit: $2.70 - $2.66 = $0.04
($0.04 X 100 X 38) = $152 or 0.11% for the notional $100,000 model portfolio.
