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) December 2023 $95-$98 in-the-money vertical Bear Put spread at $2.20 or best
Closing Trade
12-6-2023
expiration date: December 15, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
The weak ADP numbers this morning have warned investors that the economy is weaker than they thought, lighting a fire under the bond market.
When I added this position a month ago, I thought there was less than a 1% chance that bonds would rally $13 to $95 and take ten-year US Treasury yields down from 5.08% to 4.13%. Yet here we are. The market can be wrong longer than you have liquidity.
We have just enjoyed 16 consecutive winning trades. It was only a matter of time before we took a hit.
Even though other yield plays have stopped moving, the (TLT) continues upward because so many hedge fund shorts are concentrated there.
I am therefore selling iShares Barclays 20+ Year Treasury Bond Fund (TLT) December 2023 $95-$98 in-the-money vertical Bear Put spread at $2.20 or best.
This was a bet that the (TLT) would not rise above $95.00 by the December 15 option expiration in 7 trading days.
Here are the specific trades you need to execute this position:
Sell 40 December 2023 (TLT) $98 puts at………….…….......…$3.00
Buy to cover short 40 December 2023 (TLT) $95 puts at……$0.80
Net Proceeds:………………………….………..………….…...............$2.20
Loss: $2.20 - $2.60 = -$0.40
(40 X 100 X -$0.40) = $1,600
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.
