Trade Alert – (TLT) January 11, 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.

Trade Alert – (TLT)

Buy the iShares Barclays 20+ Year Treasury Bond Fund (TLT) February, 2013 $123-$126 put spread at $2.60 or best

Opening Trade


expiration date: February 15, 2013

Portfolio weighting: 10% = 40 contracts

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. This alert is for the monthly options. Don’t buy the weeklies by accident. The difference between the bid and the offer on these spread trades can be enormous. Don’t buy the legs individually or you will end up losing much of your profit up front. If you don’t get filled, then just wait for the next Trade Alert. There will be many fish in the sea.

The same applies if you don’t understand this trade. Better to watch this strategy unfold on paper in the model portfolio before you try it with real money.

Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out. These are the trades you should execute:

Buy 40 February, 2013 (TLT) $126 puts at…………$7.10
Sell short 40 February, 2013 (TLT) $123 puts at…..$4.50
Net Cost:………………………………..…….……….$2.60

Maximum potential profit at expiration:
$3.00 – $2.60 = $0.40

(40 X 100 X $0.40) = $1,600, or 1.60% profit for the notional $100,000 portfolio for a three month position.

TLT 1-11-13


The fat Lady is Singing