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 Barclay 20+ Year Treasury Bond Fund (TLT) July, 2014 $118-$121 in-the-money bear put spread at $2.92 or best
Closing Trade
6-4-2014
expiration date: July 18, 2014
Portfolio weighting: 10%
Number of Contracts = 39 contracts
We have 81% of the potential profit here in our iShares Barclay 20+ Year Treasury Bond Fund (TLT) July, 2014 $118-$121 in-the-money bear put spread. This has been one of the most difficult asset classes to trade this year, so I take profits.
Having dry powder on hand for the inevitable price spikes has been one of the most successful trading strategies of the year. If you think liquidity is bad now, wait until we get into the dog days of July and August.
These put options are so far in the money now that it?s really hard to tell where the real prices are. My screen is showing 50 cents spreads for both the $118?s and the $121?s. So you may have to play around with prices here to get done. The alternative is to wait six more weeks to expiration and take the entire profit.
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 farther out.
Here are the specific trades you need to execute this position:
Sell 39 July, 2014 (TLT) $121 puts at?????$9.75
Buy to cover short 39 July, 2014 (TLT) $118 puts at..??.$6.83
Net Proceeds:??????????????????.....$2.92
Potential Profit: $2.92 - $2.55 = $0.37
(39 X 100 X $0.37) = $1,433 or 1.43% profit for the notional $100,000 portfolio.
