Trade Alert - (TLT) November 2, 2015
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert - (TLT)- BUY
BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2015 $125-$128 in-the-money vertical bear put spread at $2.70 or best
?RISK OFF?
Opening Trade
11-2-2015
expiration date: November 20, 2015
Portfolio weighting: 10%
Number of Contracts = 37 contracts
You can pay all the way up to $2.75 for this spread and it still makes sense.
There is a huge benefit in slapping on a November spread right now because there is only 14 trading days left until the November 20 expiration.
Basically, the world has to end before then for you to lose money on this trade, if you get in at the right price.
We made money on our last short bond trade, so it is time to revisit the well.
If you can?t trade options, then buy the ProShares Ultra Short Treasury Bond Fund ETF (TBT) outright. I think $41 is going to hold.
For the many (TBT) followers out there, the coast is clear. It is safe to come out of your bunker now. You can make a lot of money trading a $41-$48 range.
All of a sudden a Federal Reserve December interest rate hike has gone from a ?maybe? to a ?probably?. Stabilization in China and expanded global QE gives them the backdrop to do this.
A monster rally in US stocks is also a big help.
As a result, the US Treasury bond market appears within a hair?s breadth of breaking down from its recent range.
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 on how to execute an options spread, please watch my training video on ?How to Execute a Bull Call Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/
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.
Here are the specific trades you need to execute this position:
Buy 37 November, 2015 (TLT) $128 puts at????.?.??$6.35
Sell short 37 November, 2015 (TLT) $125 puts at..????.$3.65
Net Cost:??????????????????.?.....$2.70
Potential Profit: $3.00 - $2.70 = $0.30
(37 X 100 X $0.30) = $1,110 or 1.11% profit for the notional $100,000 portfolio.
