Trade Alert - (TLT) September 14, 2018 TAKE PROFITS
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)September 2018 $123-$126 in-the-money vertical BEAR PUT spread at $2.98 or best
Closing Trade
9-14-2018
expiration date: September 21, 2018
Portfolio weighting: 10%
Number of Contracts = 38 contracts
We nailed the bond market in early August, going short just when the Turkish currency crisis was causing a panic among fixed income investors around the world.
Calmer minds have since prevailed, delivering us the 3 1/2 point fall in bond prices I was looking for.
I am therefore selling the iShares Barclays 20+ Year Treasury Bond Fund (TLT) September 2018 $123-$126 in-the-money vertical BEAR PUT spread at $2.98 or best.
With only .02 points left until the September 21 options expiration the risk/reward of continuing is no longer favorable.
Hanging on to a short position at the bottom of a three-month range also makes no sense. This move frees up cash which we can use the next time bonds see a significant rally to visit the trough once again.
If you didn’t do options and bought the ProShares Ultra Short 20+ Treasury Bond Fund (TBT), a bet that bonds will fall take profits also.
We are at the top end of the range.
Here are the specific trades you need to execute this position:
SELL 38 September, 2018 (TLT) $126 puts at………….………$7.60
Buy to cover short 38 September, 2018 (TLT) $123 puts at….$4.62
Net Proceeds:…………………….…………..………….…
Profit: $2.98 - $2.60 = $0.38
(38 X 100 X $0.38) = $1,444 or 14.61% in 24 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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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 close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.