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) November 2023 $76-$79 in-the-money vertical Bull Call spread at $2.98 or best
Closing Trade
11-6-2023
expiration date: November 17, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I have to tell you it was really nice being long bonds going into the biggest melt-up in 3 ½ years. We are now at the top end of the recent trading range so it’s time to ring the cash register. I want to have dry powder with which to take advantage of even a small pullback in bonds from here.
The big play for 2024 is how best to play falling interest rates and I will be flooding you with trade alerts attacking this theme.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November 2023 $76-$79 in-the-money vertical Bull Call spread at $2.98 or best.
As a result, you get to take home $1,520, or 14.61% in 15 trading days. Well done and on to the next trade.
This was a bet that the (TLT) would not fall below $79.00 by the November 17 options expiration in 15 trading days.
Here are the specific trades you need to close out this position:
Sell 40 November 2023 (TLT) $76 calls at………….………........$11.00
Buy to cover short 40 November 2023 (TLT) $79 calls at….….$8.02
Net Proceeds:……………...........…………….………..…………..….....$2.98
Profit: $2.98 - $2.60 = $0.38
(40 X 100 X $0.38) = $1,520, or 14.61% in 15 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.