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) December 2023 $79-$82 in-the-money vertical Bull Call spread at $2.92 or best
Closing Trade
11-14-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Thanks to the flat CPI announced this morning, the (TLT) has just raised a monster $2.20. Ten-year US Treasury yields have plunged to a six-week low at 4.44%.
The Fed is now definitely on hold with their interest rate rises and it's now just a matter of time before they start cutting.
To lose money on this trade 10-year US Treasury bond yields would have to have risen above 5.05% over the next 25 trading days, up from the then-current 4.63%, a bet I was willing to take.
I never hesitate to make a big profit in four trading days.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) December 2023 $79-$82 in-the-money vertical Bull Call spread at $2.92 or best.
This was a bet that the (TLT) would not fall below $82.00 by the December 15 option expiration in 22 trading days.
Here are the specific trades you need to close out this position:
Sell 40 December 2023 (TLT) $79 calls at………….……....…$11.00
Buy to cover short 40 December 2023 (TLT) $82 calls at…$8.08
Net Cost:………………………….………..………….…....................$2.92
Potential Profit: $2.92 - $2.50 = $0.42
(40 X 100 X $0.42) = $1,680, or 20.00% in 22 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.
