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
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) September, 2016 $142-$145 in-the-money vertical bear put spread at $2.55 or best??????????????????
Opening Trade
8-29-2016
Expiration date: September 16, 2016
Portfolio weighting: 10%
Number of Contracts = 39 contracts
This represents a doubling up on my short position in the US Treasury bond market (TLT).
YOU CAN PAY UP TO $2.70 FOR THIS POSITION AND IT STILL MAKES SENSE.
In view of Janet Yellen?s and Stanley Fischer?s highly hawkish statements on August 26th, not only one interest rate hike is on the table, BUT TWO!
I don?t think they?ll do it. But the debt markets will be on tenterhooks until the September 20-21 Federal Open Market Committee (FOMC) meeting, well after this position expires.
This is a bet that the ten-year Treasury bond won?t dip below 1.40% by September 16, in 13 trading days, from the current 1.63%. With the Fed at the beginning of a rate rising cycle, I think that is highly unlikely.
1.40% would represent a seven basis points above an all time low in Treasury bonds yields, and was last pegged when the prospect of a Fed tightening was uncertain, at best.
It's also a bet that (TLT) will not trade above 142 by September 16.
If you can?t trade options, buy the ProShares Ultra Short 20 Year + Treasury ETF (TBT). It is safe to come out of your bunker now. You can make a lot of money trading a $30-$35 range. Buy long dated calls, call spreads, and do buy writes.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain about how to execute an options spread, please watch my training video on ?How to Execute a Vertical Bear Put Spread? at http://www.madhedgefundtrader.com/ltt-vbpds/
The best execution can be had by placing your bid for the entire spread in the mid 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.
Here are the specific trades you need to execute this position:
Buy 39 September, 2016 (TLT) $145 puts at????.???$6.00
Sell short 39 September, 2016 (TLT) $142 puts at..????.$3.45
Net Cost:????????????????..??.?.....$2.55
Potential Profit: $3.00 - $2.55 = $0.45
(39 X 100 X $0.45) = $1,755 or 17.64% profit over the next 13 trading days.
