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) – BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) January 2025 $82-$85 in-the-money vertical Bull Call debit spread at $2.70 or best
Opening Trade
1-6-2025
expiration date: January 17, 2025
Portfolio weighting: 10%
Number of Contracts = 40 contracts
We are approaching my intermediate-term target for ten-year US Treasury bond yields of 5.00%, which equates to about $85 in the (TLT). (TLT) has just cratered by a stunning $15 since September and is approaching major six-month support at $85.
To help get the year started off, I am going for a very short-term nine-day trade here. Bonds probably haven’t finished their work on the downside yet with much larger government deficits looming, but I think they are ready for a nine-day break.
I am therefore buying the iShares Barclays 20+ Year Treasury Bond Fund (TLT) January 2025 $82-$85 in-the-money vertical Bull Call debit spread at $2.70 or best.
Don’t pay more than $2.80 or you’ll be chasing on a risk/reward basis.
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 two weeks.
This is a bet that the (TLT) will not fall below $85.00 by the January 17 option expiration in 9 trading days.
Here are the specific trades you need to execute this position:
Buy 40 January 2025 (TLT) $82 calls at………….………$5.00
Sell short 40 January 2025 (TLT) $85 calls at……….…$2.30
Net Cost:………………………….………..….......….…….….....$2.70
Potential Profit: $3.00 - $2.70 = $0.30
(40 X 100 X $0.30) = $1,200, or 12.00% in 9 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.
