Treasuries crashed last week as traders moved money out of bonds and into equities. Also, investors were concerned about rising interest rates after FMOC minutes hinted at ending the Feds bond purchase program. Treasury bonds became oversold and the price appears to have stabilized after bouncing off its support level.
TLT Position Update ---------------------------------------------------------------
TLT closed at $119.12 on Wednesday
The December 16th Couch Potato published a January expiration TLT put spread
We are closing out the January spread and rolling the position out to a February expiration TLT put spread (see tables below)
After the trade adjustment the total position should be approx. at breakeven
If prices gap up tomorrow we will hold off on the trade adjustment to let the price settle down. Conversely if prices drop sharply then we will probably initiate the February put spread at lower strike prices with a similar risk profile as described above.
The TLT put spread exit rule was triggered last week and we wanted Treasury bond prices to stabilize before adjusting the trade. January options expire next week and as mentioned above, we should close out the position to avoid the chance of assignment on the $120 short put contracts. As discussed, Treasury prices have recoverd and we are rolling the January position to February.
Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.