Trade Alert - (TLT) August 9, 2017
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) August, 2017 $128-$130 in-the-money vertical BEAR PUT spread at $1.88 or best
Opening Trade
8-9-2017
expiration date: August 18, 2017
Portfolio weighting: 10%
Number of Contracts = 53 contracts
I am going to use the massive gap up in bond prices today to attempt another short position in the bond market.
The ratchet up was triggered by the president's incendiary comments yesterday warning that North Korea is in for "fire and fury."
Thank you Mr. President.
Not only did he give me an overnight killing on my long volatility position (VXX), I'm also getting the best entry point for a bond short in a month.
I am so happy about this outcome that I am thinking of changing my party affiliation.
With bonds now at a 2.20% yield, a mere 7 basis points above the 2017 low, I am willing to bet that they won't go much lower, at least within the next 7 trading days to the August 17 options expiration.
So I am going to pick some low hanging fruit here and buy the iShares Barclays 20+ Year Treasury Bond Fund (TLT) August, 2017 $128-$130 in-the-money vertical BEAR PUT spread at $1.88 or best.
To lose money on this position yields would have to drop below 2.05%, which they won't by Friday next week. That would be a new eight-month low.
Don't pay more than $1.92 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.
If you are uncertain on how to execute an options spread, please watch my training video on "How to Execute a Vertical Bear Put Spread" by clicking here at
http://members.
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.
Here are the specific trades you need to execute this position:
Buy 53 August, 2017 (TLT) $130 puts at......................................................................$4.70
Sell short 53 August, 2017 (TLT) $128 puts at.............................................................$2.82
Net Cost:.........................................................................................................................
Potential Profit: $2.00 - $1.88 = $0.12
(53 X 100 X $0.12) = $636 or 6.38% in 7 trading days.
