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) – EXPIRATION AT MAX PROFIT
EXPIRATION of the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June 2023 $93-$96 in-the-money vertical Bull Call debit spread at $3.00
Closing Trade
6-16-2023
expiration date: June 16, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Just to be clear, this position does not expire until 4:15 PM today, June 16. Since I don’t want to overwhelm you with expiration trade alerts all at once, I am feeding this one out now.
However, with the (TLT) now up $7.00 above its nearest strike price, I think it’s safe to call this one a win.
As a result, you get to take home $1,600, or 15.38% in 22 trading days.
Well done and on to the next trade!
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Tuesday morning, June 20 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
This was a bet that the (TLT) would not fall below $96.00 by the June 16 option expiration in 10 trading days.
As I expected, bonds rallied in the wake of the Fed interest rate decision, no matter what it was. I great weight has been lifted from the market.
I am looking for the Fed not to raise interest rates again for the rest of this decade. Rates will flatline for three months. By yearend, economic weakness will be so obvious that a dramatic rate-cutting policy will ensue.
And this won’t be just any old easy money policy. I expect a 0.75% rate CUT at the July 26 meeting and for the Fed to continue cutting at a 0.75% rate at every meeting until the economy stabilizes.
In addition, the Fed will end its quantitative tightening program by June, which is currently sucking $90 billion a month out of the economy. That’s a lot of bond selling that suddenly ends. Bonds will soar.
I’m looking for $120 in the (TLT) sometime this year, with a possible stretch to $130. Use every five-point dip to load up on shares in the ETF, calls, call spreads, and one-year LEAPS. This trade is going to work fast. It is the low-hanging fruit of 2023.
Kaching!
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 months. As we are on the verge of a possible mild recession, I highly doubt this is going to happen.
This was a bet that the (TLT) would not fall below $96.00 by the June 16 option expiration in 22 trading days.
Here is the specific accounting you need to close out this position:
EXPIRATION of Buy 40 June 2023 (TLT) $93 calls at….….……$9.61
EXPIRATION of short 40 June 2023 (TLT) $96 calls at…………$6.61
Net Proceeds:………………………….……..……..........………….….....$3.00
Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.40) = $1,600, or 15.38% in 22 trading days.
It’s now the Opening Act for the Bond Market
