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) August 2019 $125-$128 in-the-money vertical BULL CALL spread at $2.60 up to $2.75
Opening Trade
7-15-2019
expiration date: August 16, 2019
Portfolio weighting: 10%
Number of Contracts = 38 contracts
With three interest cuts on the calendar by yearend, the US is about to become the fastest interest rate cutting economy in the world. Fed funds futures are indicating a 100% chance of a rate cut on July 31, and two more quarter point rates cuts by yearend.
And as sure as heavy rain follows dark storm clouds on the horizon, that means the US bond market is about to become world’s strongest.
I am therefore buying the iShares Barclays 20+ Year Treasury Bond Fund (TLT) August 2019 $125-$128 in-the-money vertical BULL CALL spread at $2.60 or best
This is a bet that the (TLT) will not fall below $128 by the August 16 options expiration in 24 trading days. Don’t pay more than $2.75 or you’ll be chasing.
If you don’t do options, buy the ProShares Ultra Short 20 Year Plus Treasury Bond ETF (TBT) outright for a quick pop.
The fundamental reasons for this trade are quite simple. The US now has among the world’s highest interest rates. They are about to join the ranks of the world’s lowest. Some 25% of the world’s outstanding government debt now has negative interest rates. In Germany the figure is an eye-popping 88%. That is hugely bullish for bond prices everywhere.
Here are the specific trades you need to execute this position:
Buy 38 August 2019 (TLT) $125 calls at………….………$6.00
Sell short 38 August 2019 (TLT) $128 calls at…………$3.40
Net Cost:………………………….………..………….…............$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(38 X 100 X $0.40) = $1,520 or 15.38% in 24 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
