Trade Alert - (TLT) June 22, 2017
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) - BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) JuLY, 2017 $130-$133 in-the-money vertical BEAR PUT spread at $2.67 or best
Opening Trade
6-22-2017
expiration date: July 21, 2017
Portfolio weighting: 10%
Number of Contracts = 37 contracts
I am going to use the massive gap up in bond prices yesterday to attempt another short position.
The ratchet up was triggered by the utter collapse in oil prices, which is screaming recession and deflation at us as loud as it can.
With bonds now at a 2.14% yield, a new low for 2017, I am willing to bet that they won't go much lower, at least within the next 20 trading days to the July 21 options expiration.
So I am going to buy the iShares Barclays 20+ Year Treasury Bond Fund (TLT) June, 2017 $130-$133 in-the-money vertical BEAR PUT spread at $2.70 or best.
To lose money on this position yields would have to drop below 2.00%, which they won't. That would be a new eight-month low.
Don't pay more than $2.75 for this position or you'll be chasing.
If you don't do options, this would be a great level to scale into a long in the ProShares Ultra Short 20+ Treasury Bond Fund (TBT), a bet that bonds will fall.
The May Nonfarm Payroll Report came in at a feeble and disappointing 119,000, short of some estimates by as much as 100,000.
The headline unemployment rate dropped to a new decade low of 4.3%, a 16 year low.
The March and April reports were revised down by a stunning 66,000.
Business Services were up by +38,000, Health Care by +24,000, and Food Services and Restaurants by +30,000.
Government lost -9,000 jobs, while beleaguered Retailers pared back another -6,000.
The U-6 Long Term structural discouraged worker unemployment rates fell to a new decade low at 8.4%.
It was a weak report for the ages. But you know what? It is now in the price, and I am therefore selling short.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute a Vertical Bear Put Spread by clicking here at
https://www.madhedgefundtrader.com/ltt-vbpds/
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.
Here are the specific trades you need to execute this position:
Buy 37 July, 2017 (TLT) $133 puts at...............................$6.00
Sell short 37 July, 2017 (TLT) $130 puts at...................$3.33
Net Cost:................................................................$2.67
Potential Profit: $3.00 - $2.70 = $0.33
(37 X 100 X $0.33) = $1,221 or 12.35% in 20 trading days.
