Trade Alert - (TLT) March 9, 2023 - TAKE PROFITS - SELL

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) March 2023 $92-$95 in-the-money vertical Bull Call debit spread at $2.95 or best

Closing Trade

3-9-2023

expiration date: March 17, 2023

Portfolio weighting: 10%

Number of Contracts = 40 contracts

We now have 87.5% of the maximum potential profit for this trade in hand. The risk/reward of continuing is no longer favorable.

You can run this position into the March 17 quarterly options expiration next week and take the max $1,600 profit. But we are so far in the money on this one that you might have your short leg called away. This is fine if you know how to handle options called away, but confusing and stressful if you don’t.

In any case, I want to free up some cash in case we get some dramatic fireworks and great entry points of the Friday and Tuesday data points. That’s what Jay Powell is doing.

I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) March 2023 $92-$95 in-the-money vertical Bull Call spread at $2.95 or best.

As a result, you get to take home $1,400, or 13.46% in 13 trading days. Well done and on to the next trade.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Simply enter your limit order, wait five minutes, and if you don’t get done cancel your order and lower your offer by 2 cents with a second order.

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. 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 months. 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 $95.00 by the March 17 options expiration in 19 trading days.

Here are the specific trades you need to close out this position:

Sell 40 March 2023 (TLT) $92 calls at………….………….....……$7.00

Buy to cover short 40 March 2023 (TLT) $95 calls at…………$4.05

Net Proceeds:…………………..………..………….............……….....$2.95

Profit: $2.95 - $2.60 = $0.35

(40 X 100 X $0.35) = $1,400, or 13.46% in 13 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.