Based on reports from subscribers in the chat room, I’ve established a tracking position of ten Feb 20 132.50 puts for 0.40. Ordinarily I wouldn’t attempt shorting a vehicle that I’m so bullish on, but the Hidden Pivot rally target we used to get short looked like an important one that could send TLT into a sharp correction. The stock (an ETF, actually) did in fact pull back 1.62 points yesterday from within an inch of the target, but bulls recouped half of the loss by the close, suggesting they’re not about to be intimidated. Under the circumstances, I’ll suggest offering ten Feb 20 129.50 puts short for 0.34 against our position, day order, but pulling the 0.19 stop-loss that had been suggested earlier. Check back later tonight and again after the opening, since I may revise this strategy if T-Bond futures look strong. Please note that if yesterday’s weakness continues, TLT could fall immediately to 136.07 before finding traction. _______ UPDATE (9:59 a.m. EST): TLT is getting hammered again today, down nearly 2 points. Since there’s NO volume in the fractional strikes, I’ll suggest offering ten Feb 20 130 puts short for 0.34. Take 0.02 discretion, meaning you could probably bang ’em out now for 0.32. _______ UPDATE (3:16 p.m.): TLT’s steep fall today made this trade an easy winner. Some subscribers reported cashing out half of the puts they’d bought earlier for twice what they paid. Others reported executing the trade exactly as I’d suggested. The former can manage their “free” puts in any way they choose. However, for tracking purposes I’ll use ten Feb 20 130.0-132.5 put spreads with a cost basis of 0.06. This means that the worst we can do is lose $60, while we stand to gain as much as $2440 if things go our way. The position is a bearish play on a vehicle that I think is going to the moon, but we’re getting 40-to-1 odds to take the ‘wrong’ side of the bet for just a short while. FYI, I did an extensive analysis of TLT during this morning’s impromptu session. The bottom line is that 133.00 should be regarded as a back-up-the-truck number for getting long — something we’ve done numerous times over the last several months. For additional details, check out the recording of the session when it is posted on the home page later today.
