Trade Alert (TLT) - December 27, 2016
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.
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Trade Alert - (TLT)- TAKE PROFITS
SELL the iShares 20+ Year Treasury Bond ETF (TLT) January, 2017 $125-$128 in-the-money vertical bear put spread at $2.95 or best
Closing Trade
12-27-2016
expiration date: January 20, 2017
Portfolio weighting: 10%
Number of Contracts = 39 contracts
Nothing like going out with a bang in 2016.
I am going to use the big dump in bond prices this morning to take profits in my short position.
This gives us a 15.68%, or $1,560 profit in only 16 trading days. With 88.88% of the maximum potential profit in this trade in hand, the risk/reward is no longer for continuing.
Cash has more value right now, which will enable me to resell bonds in the next two-point rally, whenever that occurs.
If you can?t trade options, keep the ProShares UltraShort 20+ Year Treasury ETF (TBT) for a medium term view. Potentially, it could double over the next four years.
This means that 78.94% of my recent trades have been profitable. The last six consecutive trading months have been in the green, despite the hair raising swings in the market.
This was a bet that the iShares 20 Year+ Treasury Bond ETF (TLT) would not close above $125 by the January 20, 2017 expiration in 17 more trading days.
That works out to a yield on the 10-year Treasury bond of 2.30%, versus the current 2.55%.
One outcome of the presidential election is that I expect yields on the ten-year Treasury to rise to as high as 6.0% within four years, taking the iShares 20 Year+ Treasury Bond ETF (TLT) down $50 to as low as $70.
Low risk, high return, I love it!
Open your online trading platform please.
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 this options spread, please watch my training video ?How to Execute a Vertical Bear Put Spread?
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.
Please keep in mind these are ballpark prices at best. After the text alerts go out, prices can be all over the map. There is no telling how much the market will have moved by the time you get this email.
Paid subscribers, be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a definite trading advantage.? In today's volatile markets, individual investors need every advantage they can get.
Here Are the Specific Trades You Need to Execute This Position:
Sell 39 January, 2017 (TLT) $128 puts at????.???$10.75
Buy to cover short 39 January, 2017 (TLT) $125 puts at..?.$7.80
Net Cost:????????????????..??.?.....$2.95
Potential Profit: $2.95 - $2.55 = $0.40
(39 X 100 X $0.40) = $1,560 or 15.68% in 16 trading days.
