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 Barclays 20+ Year Treasury Bond Fund (TLT) April 2023 $113-$116 in-the-money vertical Bear Put debit spread at $2.92 or best
Opening Trade
3-28-2023
expiration date: April 21, 2023
Portfolio weighting: 10%
Number of Contracts = 40 contracts
I am getting calls from customers that they are getting $2.92 for this spread. With 80% of the maximum profit in hand, the risk/reward of continuing for 14 more trading days is no longer favorable.
We caught a $4.00 dive in the (TLT) in only six trading days, taking yields from 3.30% back up to 3.56%.
Not only are stocks going nowhere in a narrow sideways trading range, so are bonds. Better to take profits here and roll the money back into a better bond trade.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) April 2023 $113-$116 in-the-money vertical Bear Put debit spread at $2.92 or best.
As a result, you get to take home $1,280, or 16.00% in 6 trading days. Well done and on to the next trade.
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 goes into a deep recession very quickly. As we are on the verge of a possible mild recession at worst, I highly doubt this is going to happen. And this has to happen in only 19 trading days.
This was a bet that the (TLT) would not rise above $113.00 by the April 21 options expiration in 19 trading days.
Here are the specific trades you need to close out this position:
Sell 40 April 2023 (TLT) $116 puts at………….............………$12.00
Buy to cover short 40 April 2023 (TLT) $113 puts at…………$9.08
Net Proceeds:………………………….………...........………….….....$2.92
Profit: $2.92 - $2.60 = $0.32
(40 X 100 X $0.32) = $1,280, or 16.00% in 6 trading days.
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.
