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
EXPIRATION of the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June 2020 $175-$180 in-the-money vertical Bear Put spread at $5.00 or best – Trade No.3
Closing Trade - NOT FOR NEW SUBSCRIBERS
6-19-2020
expiration date: June 19, 2020
Portfolio weighting: 10% down to zero
Number of Contracts = 24 contracts
Assuming that the (TLT) does not rise $18.33 by the close today, our position in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June 2020 $175-$180 in-the-money vertical Bear Put spread will expire at its maximum expiration value of $5.00.
My bet that massive over-issuance of US Treasury bonds to fund $6 trillion in stimulus programs proved correct.
By coming out here, you get to take home $1,320 or 12.36% in 30 trading days.
The fundamentals of this trade are very simple. With the national debt already rising from a record $26 trillion to an eye-popping $32 trillion by the end of 2010, the US Treasury demands on the bond market are going to be incredible.
It is almost mathematically impossible for bond prices to rise. They can only go sideways at best, or down big in the worst case. Sounds like a great short to me.
If you have the ProShares UltraShort 20 Year Plus Treasury Bond ETF (TBT) outright for a medium-term investment, keep it.
This was a bet that the (TLT) would not rise above $175.00 by the June 19 option expiration in 30 trading days. To lose money on this position, ten-year US Treasury yields would have to approach 0.30%.
Here are the specific trades you need to exit this position:
EXPIRATION of 24 June 2020 (TLT) $180 puts at………...…$18.23
EXPIRATION of short 24 June 2020 (TLT) $175 puts at……$13.23
Net Proceeds:…………………..........……….………..………….….....$5.00
Profit: $5.00 - $4.45 = $0.55
(24 X 100 X $0.55) = $1,320 or 12.36% in 30 trading days.
