As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (TLT)- BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2015 $128-$133 in-the-money vertical bear put spread at $4.30 or best
?RISK OFF?
Opening Trade
10-5-2015
expiration date: November 20, 2015
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Wow!
I had so much fun on that ride that I want to go again.
I?m referring to my purchase of the iShares Barclays 20+ Year Treasury Bond Fund (TLT) October, 2015 $130-$133 in-the-money vertical bear put spread at $2.45 on Friday.
With in minutes, I saw that spread trading at $2.80. I even saw a print of $3.10, which makes absolutely no sense whatsoever, as it is through intrinsic value.
But who said bond markets ever had to make sense?
Never mind that only the first one or two readers managed to get into the trade below the market folded like a soggy taco. That why I give prices ranges and alternatives, like the (TBT).
It is all a testimony to how weak the bond markets are, even though prices are high.
Thank the weak September nonfarm payroll for giving us a great entry point.
So I want to sell some more.
The iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2015 $128-$133 in-the-money vertical bear put spread is a bet that the Treasury bond market will stay below the $128 handle by the November 20 expiration.
It is also a bet that the yield on the ten-year Treasury bond does not fall below 1.70% during this time, a multiyear low.
You wanted a rally to sell bonds into? This is a rally and a half.
You can pay all the way up to $4.50 for this spread and it still makes sense.
If you can?t trade options, then buy the ProShares Ultra Short Treasury Bond Fund ETF (TBT) outright. I think $41 is going to hold.
For the many (TBT) followers out there, the coast is clear. It is safe to come out of your bunker now. You can make a lot of money trading a $41-$48 range.
What happens after the Federal Reserve surprises with no interest rate hike? They surprise again with an interest rate hike, possibly as soon as this month!
Keep in mind that we have ?fast trading? conditions now, so the prices can be anywhere.
I have no idea where this spread is actually trading.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/
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.
Here are the specific trades you need to execute this position:
Buy 25 November, 2015 (TLT) $133 puts at????.?.??$10.10
Sell short 25 November, 2015 (TLT) $128 puts at..????.$5.80
Net Cost:??????????????????.?.....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(25 X 100 X $0.70) = $1,750 or 1.75% profit for the notional $100,000 portfolio.
