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, 2017 $127-$129 in-the-money vertical BEAR PUT spread at $1.78 or best
expiration date: October 20, 2017
Portfolio weighting: increase from 10% to 20%
Number of Contracts = 56 contracts
This week, the bond market has gone from a correction, to a selloff, to a meltdown.
All sorts of technical barriers are being smashed as I write this.
After a ten-month vacation, the Great Bear Market in bonds has finally resumed once again.
So I am going to double up my short position in this asset class and buy the iShares Barclays 20+ Year Treasury Bond Fund (TLT) October, 2017 $127-$129 in-the-money vertical BEAR PUT spread at $1.78 or best.
To lose money on this position the (TLT) would have to rise above $127.00, and yields would have to drop below 2.16%, before the October 20expiration date in 16 trading days.
Don’t pay more than $1.85 for this position or you’ll be chasing.
If you don’t do options, this would be a great level to scale into a long in the ProShares Ultra Short 20+ Treasury Bond Fund (TBT), a bet that bonds will fall.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you’ve signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today’s market, investors need every advantage they can get.
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 close to expiration.
If you don’t get done, don’t worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
Here are the specific trades you need to execute this position:
Buy 56 October, 2017 (TLT) $129 puts at……………………………….$4.90
Sell short 56 October, 2017 (TLT) $127 puts at………………………….$3.12
Potential Profit: $2.00 – $1.78 = $0.22
(56 X 100 X $0.22) = $1,232 or 12.35% in 16 trading days.