Trade Alert - (TLT) April 9, 2025 - STOP LOSS - SELL

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) – STOP LOSS

SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT) May 2025 $82-$85 in-the-money vertical Bull Call debit spread at $2.40 or best

 

Closing Trade

4-9-2025

expiration date: May 16, 2025

Portfolio weighting: 10%

Number of Contracts = 40 contracts

It looks like we are headed for a full-scale financial crisis.

That’s what the US Treasury bond market is telling us this morning by falling $7 points in three days. Ten-year US Treasury bond yields have rocketed from 3.9% to 4.5% and we soon could be headed to 5.0%, the sharpest selloff in bonds since 1981. Credit spreads are exploding as evidenced by the collapse of the junk bond market. The collateral value of the United States just fell by 7.5%.

Foreign investors, who own 50% of our debt, have lost all confidence in the present leadership of the US government and are dumping bonds. They are no longer tolerating investing in a country that is relentlessly attacking its own economies.

Stocks also hit new lows overnight, leading to another round of ferocious margin calls. The Volatility Index (VIX) topped 60 last night. In many cases, brokers have raised margin requirements to 100% to protect themselves. The (TLT) is allowed only 50% collateral value for margin purposes, while Treasury bills get 100%.

Cash, or 90-day US Treasury bills yielding 4.2%, is the only trade that works in this chaotic environment. When trades stop working, you bail as fast as you can.

I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) May 2025 $82-$85 in-the-money vertical Bull Call debit spread at $2.40 or best.

If you live in a foreign time zone when the US stock market is closed, such as Australia, or don’t want to sit in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like  $2.40, $2.35, $2.30, and $2.25. You should get done on some or all of these.

This was a bet that the (TLT) would not fall below $85.00 by the May 16 option expiration in 29 trading days.

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

Sell 40 May 2025 (TLT) $82 calls at………….……………...…...$6.50

Buy to cover short 40 May 2025 (TLT) $85 calls at………..…$4.10

Net Proceeds:………………………….……….……….….................$2.40

Loss: $2.60 - $2.40 = $0.20

(40 X 100 X $0.20) = $800

 

 

It’s now the Opening Act 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.