Polihale.com > Predictions > August 31, 2020

Prediction Made: August 30, 2020 at 03:14 GMT
Issue (ticker): TLT: iShares 20+ Year Treasury Bond ETF
TLT on Yahoo! Finance
Sentiment: LONG (bullish, prices will rise)
duration: short-term, fewer than four days, perhaps as short as intraday
expected profit: 1% to 2% in issue price; 5% to 20% with call options

How To Trade This Prediction

Note: all bets are off if there has been a major unexpected news event since the prediction

Less-Aggresive, Less-Risky trade:
Buy some shares of TLT at the next opening bell. Consider selling at least half after they increase 1% in value. In any case, sell it all within four days as this prediction does not go beyond that.

Aggressive and risky trade:
Buy call options of TLT at the next opening bell. Pick a strike price that's nearly At-The-Money (ATM). Pick an expiration date that's two or three weeks in the future. An extremely aggressive and profitable trade (but very risky) would be to pick an expiration date only a few days away. Sell when profits exceed 10%. In any case, close all positions within a few days.

Some options are lightly traded at the opening bell which results in a large spread between the Bid and Ask prices. That's a bad time to buy. Sometimes the only way to get a reasonable price is to wait a few minutes until the Bid and Ask start converging.

Actual Performance:

BOUGHT TLT Sep 18 2020 162.0 Call options @ 2.50 on August 31, 2020
SOLD half on September 1, 2020 @ 3.15
SOLD half on September 2, 2020 @ 4.05
Overall gain from this trade: +44%

With this trade, $1 invested in all Polihale.com predictions since August 30, 2020 would be worth...
  • $1.22 (50% of capital invested per trade)
  • $1.11 (25% of capital invested per trade)
  • $1.05 (12% of capital invested per trade)
  • $1.03 (6% of capital invested per trade)

Epilogue:

TLT continued to rally until the afternoon of September 3, 2020. This means some potential gains were missed, but it's better to take gains off the table sometimes rather than carry risk. All gains are good.