Trade Alert - (TLT) December 3, 2015
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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert - (TLT)- TAKE PROFITS
SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT) December, 2015 $124-$127 in-the-money vertical bear put spread at $2.77 or best
Closing Trade
12-3-2015
expiration date: December 18, 2015
Portfolio weighting: 10%
Number of Contracts = 42 contracts
Well, this is a no brainer.
The ECB?s Mario Draghi shocked the world a few minutes ago by announcing that the central bank will ONLY cut interest rates by 10 basis points, from -0.20% to -0.30%. At least 20 basis points was expected by the markets.
This triggered a massive $2.25 rise in the Euro (FXE), which in turn, brought us a monster $2.25 point dump in the (TLT), which we are short.
At this morning?s opening I can capture 64.46% of the maximum potential profit in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) December, 2015 $124-$127 in-the-money vertical bear put spread TWO WEEKS BEFORE THE MOST IMPORTANT FED MEETING IN A DECADE.
RING THE CASH REGISTER AGAIN PLEASE.
If bought the ProShares Ultra Short Treasury Bond Fund ETF (TBT) outright instead, keep it. I think $42 is going to hold, and the upside target is $47.
The entire profit from the put spread came from time decay. The (TLT) is exactly unchanged from when we slapped this baby on a month ago. This is why I like in-the-money vertical bear put spreads.
They pay me, even when I?m wrong.
For the many (TBT) followers out there, the coast is clear. It is safe to come out of your bunker now. You can make a lot of money trading a $42-$48 range.
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 on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/
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.
Here are the specific trades you need to execute this position:
Sell 42 December, 2015 (TLT) $127 puts at????.???$6.40
Buy to cover short 42 December, 2015 (TLT) $124 puts at...$3.63
Net Cost:????????????????..??.?.....$2.77
Potential Profit: $2.77 - $2.40 = $0.37
(42 X 100 X $0.37) = $1,554 or 1.56% profit for the notional $100,000 portfolio.
