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. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Trade Alert – (TLT)- TAKE PROFITS
SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2015 $128-$133 in-the-money vertical bear put spread at $4.90 or best
expiration date: November 20, 2015
Portfolio weighting: 10%
Number of Contracts = 25 contracts
Bonds prices just hit a one month low, so I am going to take profits on my short position here and sell the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2015 $128-$133 in-the-money vertical bear put spread.
At the $4.90 price, we have captured 86% of the maximum potential profit in the position. That works out to a welcome 13.95% profit in three weeks.
The risk/reward just does not favor continuing on to the expiration in three weeks.
Pop the Champaign and move on to the next trade.
Besides, if stocks see a mini correction in November that I expect, then bonds will rally in a ?RISK OFF? trade. I want to have dry powder so I can go back into bonds on the short side.
Falling bond prices are going to become a central theme for the rest of out trading lives.
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:
Sell 25 November, 2015 (TLT) $133 puts at????.?.??$11.50
Buy to cover short 25 November, 2015 (TLT) $128 puts at?.$6.60
Profit: $4.90 – $4.30 = $0.60
(25 X 100 X $0.60) = $1,500 or 1.50% profit for the notional $100,000 portfolio.