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) TAKE PROFITS
SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June, 2017 $128-$130 in-the-money vertical BEAR PUT spread at $1.95 or best
Closing Trade
6-8-2017
expiration date: June 16, 2017
Portfolio weighting: 10%
Number of Contracts = 56 contracts
I am going to use the $1.5 point drop in bond prices this week to take profits in my short position in the (TLT).
I am there selling my position in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June, 2017 $128-$130 in-the-money vertical BEAR PUT spread at $1.95 or best.
The Comey testimony starts in a few minutes and anything can happen.
At this price we have captured 77.27% of the maximum possible profit in the spread.
I rarely do two point spreads, and this position caries more than the usual amount of risk.
9.55% is not a huge profit, but is better than a poke in the eye with a sharp stick for only four trading days.
In this kind of market a bird in the hand is worth 1.23 birds in the bush.
The risk reward is no longer favorable for carrying on for the last five trading days going into the June 16 expiration.
If you didn?t do options and bought the (TBT) instead hold on. This fund has much higher to go over time.
This takes me to a rare 100% cash position.
If bonds want to retest the 2017 highs again in coming weeks I?ll be back in there again on the short side.
For a few of you there won?t be much profit in this trade after commissions. That?s because you are greatly overpaying you broker.
Call them and ask for a discount, giving this trade as an example, and I guarantee they?ll give it to you.
Brokers don?t make money on commissions any more. They stay in business by selling your order flow to high frequency traders without your knowledge.
Well done and on to the next trade.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Vertical Bear Put Spread? by clicking here at
https://www.madhedgefundtrader.com/ltt-vbpds/
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.
Here are the specific trades you need to execute this position:
Sell 56 June, 2017 (TLT) $130 puts at...............................$5.70
Buy to cover short 56 June, 2017 (TLT) $128 puts at...................$3.75
Net Proceeds:......................................................$1.95
Profit: $1.95 - $1.78 = $0.17
(56 X 100 X $0.17) = $952 or 9.55% in 4 trading days.
