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) October 2022 $113-$116 in-the-money vertical Bear put spread at $2.95 or best
Closing Trade
9-28-2022
expiration date: October 21, 2022
Portfolio weighting: 10%
Number of Contracts = 40 contracts
We now have 87.5% of the maximum potential profit in this trade. In these incredibly volatile markets, the risk reward to carry it for another 17 days to capture the last five cents is not worth it.
Not only are we a humongous $12 points in-the-money from our nearest strike price. We caught the sharpest selloff in bond market history. The ten-year US Treasury yield hit 4.00% yesterday and 30-year fixed rate mortgages are at an incredible 7.08%.
We are also approaching my 2 ½ - year (TLT) target for the entire bear market in bonds at $100. I caught the entire $80 move many times over. I’m going to have to find some new tricks to earn a living.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) October 2022 $113-$116 in-the-money vertical Bear put spread at $2.95 or best.
As a result, you get to take home $1,400 or 13.46% in 4 trading days. Well done, and on to the next trade.
This was a bet that the (TLT) would not rise above $113.00 by the October 21 options expiration in 21 trading days.
Here are the specific trades you need to close out this position:
Sell 40 October 2022 (TLT) $116 puts at……......…….………$15.00
Buy to cover short 40 October 2022 (TLT) $113 puts a……$12.05
Net Proceeds:………………………….………..…........……….….....$2.95
Profit: $2.95 - $2.60 = $0.35
(40 X 100 X $0.35) = $1,400 or 13.46% in 4 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.
