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) April 2024 $100-$103 in-the-money vertical Bear Put debit spread at $2.95 or best
Closing Trade
3-14-2024
expiration date: April 19, 2024
Portfolio weighting: 10%
Number of Contracts = 40 contracts
The bond market really did not like the Producer Price Index released this morning at 0.60% for February, about double what was expected.
Interest rates are certain to fall this year, BUT NOT YET.
I believe we are looking at June at the earliest. This is a very conservative Fed. We have just seen a nice $4 rally in the (TLT) which I am happy to sell into.
As a result, ten-year US Treasury bond yields have soared from 4.05% to 4.30%, taking the (TLT) down by $3.50. I actually like taking 87.5% of the maximum potential profit in a position in only five trading days. The risk/reward of continuing for another month is not favorable.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) April 2024 $100-$103 in-the-money vertical Bear Put debit spread at $2.95 or best.
As a result, you get to take home $1,400, or 13.46% in 5 trading days. Well done and on to the next trade!
After selling short bonds (TLT) from $180 all the way down to $82, I flipped to the long side on October 26. The next day, bonds saw their biggest rally in years, making instant millionaires out of several of my followers.
In a heartbeat, we went from super bear to hyper bull.
We are now entering a long-term declining period for the interest rate cycle. By yearend, economic weakness will be so obvious to the Fed that a dramatic rate-cutting policy will ensue to avoid a recession.
And this won’t be just any old easy money policy. I expect 0.25% rate CUTS for the indefinite future and for the Fed to continue cutting at a 0.25% rate at every meeting until the economy stabilizes.
In addition, the Fed is ending its quantitative tightening program this year, 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 $110 in the (TLT) sometime in 2024 and maybe even $120. Use every 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 2024.
Kaching!
This is a bet that the (TLT) will not rise above $100.00 by the April 19 option expiration in 31 trading days.
Here are the specific trades you need to exit this position:
Sell 40 April 2024 (TLT) $103 puts at………….….............……$10.00
Buy to cover short 40 April 2024 (TLT) $100 puts at….……….$7.05
Net Proceeds:…….…………….………..………….…........................$2.95
Profit: $2.95 - $2.60 = $0.35
(40 X 100 X $0.35) = $1,400, or 13.46% in 5 trading days.
It’s now the Opening Act for the Bond Market
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
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.
