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 Fund (TLT) May, 2017 $116-$119 in-the-money vertical bull call spread at $2.96 or best
Closing Trade – Not For New Subscribers
expiration date: May 19, 2017
Portfolio weighting: 10%
Number of Contracts = 38 contracts
I am going to use the spike up in bond prices to take yet ANOTHER home run and rake in the profits in my position in the iShares 20+ Year Treasury Bond ETF (TLT) May, 2017 $116-$119 in-the-money vertical BULL CALL spread.
This gives me a 14.28% profit in only nine trading days.
It means that I made money on both the long AND the short side this month.
Life is good.
With 90.25% of the maximum potential profit in hand, the risk reward for carrying on for five more trading days to expiration is no longer favorable.
Better to have dry powder in hand so we can take advantage of the next ratchet move up or down.
This trade takes our trailing one-year performance up to an eye-popping 46.56%, one of the best in the hedge fund industry.
I know I’ve said this before, but the harder I work, the luckier I get.
This was a bet that the iShares 20+ Year Treasury Bond ETF (TLT), would not trade BELOW $119 by the May 19th expiration date. That is $2.37 points away from the current price.
With the Federal Reserve expected to raise interest rates as early as June, our interest rate bet paid off big time.
Also, with my proprietary Mad Hedge Marketing Timing Index now dead on 63, prudence augurs in favor of reducing positions to a minimum.
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 Bull Call 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 with only five days to expiration.
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 May, 2017 TLT $116 calls at………….………$5.50
Buy to cover short 38 May, 2017 TLT $119 calls at..….$2.54
Profit: $2.96 – $2.59 = $0.37
(38 X 100 X $0.37) = $1,406 or 14.28% in nine trading days.