Follow Up to Trade Alert – (TLT) November 5, 2013

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.

Further Update to: Trade Alert(TLT)

Sell the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November $109-$112 bear put spread at $2.98 or best

Closing Trade


expiration date: 11-15-2013

Portfolio weighting: 10%

Number of Contracts = 37 contracts

It doesn’t get any better than this. Since I added this short position just three trading days ago, the (TLT) has lost two full points worth 10 basis points in the ten year Treasury bond. I get to capture 92% of the potential profit. And I get to do this three days before the next big risk even to hit the markets on Friday, the October nonfarm payroll.

I wish they were all this easy.

If we get a terrible number on Friday, and we should, thanks to the government shutdown, then Treasury yields will back up 10-15 basis points. I am then going to plow right back into this position, but with a December expiration instead of November one.

As they say in the Marine Corps Officer’s Field Manual, when you have the advantage, continue the attack.

Attack, attack, attack!

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.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months further out.

Here are the specific trades you need to execute this position:

Sell 37 November, 2013 (TLT) $112 puts at……………..…$6.90
Buy to cover short 37 November, 2013 (TLT) $109 puts at…$3.92

Net Proceeds:………………………………….……..………….$2.98

Potential Profit: $2.98 – $2.76 = $0.22

($0.22 X 100 X 37) = $814, or 0.81% for the notional $100,000 model portfolio.

TLT 11-5-13