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)- TAKE PROFITS
SELL the iShares 20+ Year Treasury Bond ETF (TLT) March, 2017 $126-$129 in-the-money vertical BEAR PUT spread at $2.92 or best
Closing Trade-NOT FOR NEW SUBSCRIBERS
Expiration Date: March 17, 2017
Portfolio Weighting: 10%
Number of Contracts = 38 contracts
I have enough scars to prove that when the market gives you a 10.19% profit in only four trading days, you grab it by the lapels and shake it for all it is worth.
Janet Yellen’s hint to Congress this morning that the March interest rate hike is still on the table has knocked the stuffing out of the bond market.
That makes my move to short the TLT last Thursday now look like a stroke of genius. Since then, the TLT has plunged some $3.
So I am going to take profits in my position in the iShares 20+ Year Treasury Bond ETF (TLT) March, 2017 $126-$129 in-the-money vertical BEAR PUT spread.
By coming out here, we get to reap 77.14% of the maximum profit in this trade and duck the remaining 23 trading days to the March 17th expiration date.
Heaven knows what we can do with this money until then.
If you have the ProShares UltraShort 20+ Year Treasury (TBT), keep it. It is going to rise by at least 400% over the next several years.
This was a bet that the TLT would not trade above $126 by the March 17th expiration date, then 27 trading days in the future.
I still think the next Fed rate rise has been pushed off to June at the earliest. So we should get another sweet spot to reenter this position.
Yes, despite the fact that bonds peaked last July, we have been in a counter-trend mini bull market for the past two months.
To lose money on this trade, the ten-year US Treasury yield had to fall below 2.12%, compared to today’s 2.49%.
With massive tax cuts hitting the economy SOMEDAY I didn’t see that happening by March 17th. Stocks would have to crash to substantially move bonds, and that isn’t going to happen either.
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 on expiration months farther out.
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 service for Trade Alerts. 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 38 March, 2017 TLT $129 puts at………….………$10.30
Buy to cover short 38 March, 2017 TLT $126 puts at..….$7.38
Profit: $2.92 – $2.65 = $0.27
(38 X 100 X $0.27) = $1,026 or 10.19% in four trading days.