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) September, 2018 $116 out-of-the-money long dated PUTS only at $1.30 or best
Closing Trade
6-1-2018
expiration date: September 21, 2018
Portfolio weighting: 5%
Number of Contracts = 66 contracts
Yes, I'll take the 62.50% profit in three trading days.
In the blink of an eye, we have made back half of the drop in interest rates prompted by the Italian political crisis. Ten-year US Treasury yields plunged from 3.12% all the way down to 2.75% and are now back up to 2.92%. Bonds have almost fallen three points in three days.
We got a big helping hand from the May nonfarm payroll report coming in at a hot 223,000.
This trade you the merits of going outright long options instead of spreads when you a expect a very sharp, rapid move in the immediate term.
Here is the specific trade you need to execute this position:
Sell 66 September 2018 (TLT) $116 puts at......................$1.30
Profit: $1.30 - $0.80 = $0.50
(66 contracts X 100 shares/contract X $0.50 price) = $3,300, or 62.50% in three trading days
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.