Sunday, October 5, 2014

Review of current (November) TBT & TLT positions

In the last month, I basically followed the ideas in the last post and tried to let the TBT options expiring worthless. Well, the short call Oct$62 did expire on 9-20 with a mild level of risk of breaking above the short strike a few days before expiration. But I decided to hold on and it worked this time. However, I may be facing another challenge on the Nov$53p (P2S in the chart below), as TBT pulled back significantly to my surprise. If TBT drops below $54, I will consider closing the sold put spread.
As part of my plan, I started using TLT for my future trades as it's more liquid than TBT. I thought TBT & TLT would change their long term trends after the recent FED meeting. I will consider the thought invalidated if the ETF's take over their previous support/resistance.

For the TLT, I sold Nov$109/104 put spreads on 9-17 as it was approaching the lower Bollinger band with a high IV about one hour before FED meeting announcement. 4 days later, the TLT rose to give me a quick 50% profit and I exited the trade (P1 & P2). To my surprise, TLT continued to rise. I waited for a few days and finally sold Nov$121/126 call spread. All the short options were of 0.20 Deltas and credits were above or equal to $0.50 for a 10%+ ROM.
If TLT breaks above $119 firmly, I may start taking some adjustment actions. But the short call options may not be rolled until a 0.65 Delta is reached.

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