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) – BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) October 2022 $113-$116 in-the-money vertical Bear put spread at $2.60 or best
Opening Trade
9-23-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 40 contracts
Here is the bad news: we may get another 75 basis points at the next Fed meeting on November 1-2.
Selling short the (TLT) last November has been one of the best trades of my career. Since then, the beleaguered ETF has collapsed some $50.
I am therefore buying the iShares Barclays 20+ Year Treasury Bond Fund (TLT) October 2022 $113-$116 in-the-money vertical Bear put spread at $2.60 or best
Don’t pay more than $2.75 or you’ll be chasing on a risk/reward basis.
This is a bet that the (TLT) will not rise above $113.00 by the October 21 option expiration in 21 trading days.
Here are the specific trades you need to execute this position:
Buy 40 October 2022 (TLT) $116 puts at………….………$10.00
Sell short 40 October 2022 (TLT) $113 puts at…...………$7.40
Net Cost:………………………….………..………….…...............$2.60
Potential Profit: $3.00 - $2.60 = $0.40
(40 X 100 X $0.40) = $1,600 or 15.38% in 21 trading days.
The Fat Lady is Singing for the Bond Market
If you are uncertain about 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.
