Trade Alert - (TLT) January 20, 2023 - EXPIRATION AT MAX PROFIT

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) – EXPIRATION AT MAX PROFIT

EXPIRATION of the iShares Barclays 20+ Year Treasury Bond Fund (TLT) January 2023 $94-$97 in-the-money vertical Bull Call spread at $3.00

Closing Trade

1-20-2023

expiration date: January 20, 2023

Portfolio weighting: 20% - double weighting

Number of Contracts = 80 contracts

Since Tesla shares for this spread are now an amazing $54.43, or 72.57% in the money, I think it’s safe to call this one a win even though we have two more days until expiration.

We have the good fortune to have six options positions expiring at their maximum profit points at 4:00 PM on Friday, January 20. So you don’t get overwhelmed by getting six trade alerts at once, I will start feeding them out now.

As a result, you get to take home $3,200, or 16.00% in 18 trading days.

Well done and on to the next trade. 

You don’t have to do anything with this expiration.

Your broker will automatically use your long position to cover your short position, canceling out the total holdings.

The entire profit will be credited to your account on Monday morning, January 23 and the margin freed up.

Some firms charge you a modest $10 or $15 fee for performing this service.

After selling short bonds (TLT) from $180 all the way down to $91, I flipped to the long side on October 14. The next day, bonds saw their biggest rally in years, making instant millionaires out of several of my followers.

In a heartbeat, we went from super bear to hyper bull.

I am looking for the Fed to raise interest rates by 0.50% rise at the February 1 meeting, 0.25% at the March 22 meeting. After that, rates will flight line for three months. By June, economic weakness will be so obvious that a dramatic rate-cutting policy will ensue.

And this won’t be just any old easy money policy. I expect a 0.75% rate CUT at the July 26 meeting and for the Fed to continue cutting at a 0.75% rate at every meeting until the economy stabilizes.

In addition, the Fed will end its quantitative tightening program by June, which is currently sucking $90 billion a month out of the economy. That’s a lot of bond selling that suddenly ends.

There is another huge bond positive in the works. In 2022, the US budget deficit dropped at its fastest rate in history, from $3 trillion to $1.5 trillion. Reduce the supply and prices can only go up. It’s basic supply and demand.

Bonds will soar.

I’m looking for $120 in the (TLT) sometime in 2023, with a possible stretch to $130. Use every five-point dip to load up on shares in the ETF, calls, call spreads, and one-year LEAPS. This trade is going to work fast. It is the low-hanging fruit of 2023.

Kaching!

The only way to lose money on this position is if the US economy absolutely catches on fire and sends interest rates soaring in the next month. As we are on the verge of a possible mild recession, I highly doubt this is going to happen.

This was a bet that the (TLT) would not fall below $97.00 by the January 20 option expiration in 18 trading days.

Here is the specific accounting you need to close out this position:

Expiration of 80 January 2023 (TLT) $94 calls at…………$13.35

Expiration of short 80 January 2023 (TLT) $97 calls at…$10.35

Net Proceeds:……………………......…….………..………….….....$3.00

Profit: $3.00 - $2.60 = $0.40

(80 X 100 X $0.40) = $3,200, or 16.00% in 18 trading days.

 

 

It’s now the Opening Act for the Bond Market