Tuesday, October 29, 2013

Sold TBT Dec$70p after its pullback for 2 months

TBT had risen for 4 months then started falling. Its price is around the support of an uptrending 200 DMA at $70. Since I expect an rising interest rate environment over the longer term, I sold Dec$70 put for $1.23 to get a cost of $68.77 in case I get assigned.

The average implied volatility shown in the chart appears to follow the price performance of TBT, due to its inverse relationship with market. This is different from other regular stocks. TOS option chain window indicated the covered return rate of 11.5% for this trade.

Similar to USO, TBT has a relative loose correlation with stock market. This gives me an opportunity to play the overheated market in the short team.

Created with ProphetCharts®

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