Wednesday, May 6, 2015

Sold June $116/111 put vertical spreads on TLT

Yesterday, TLT finally dropped to the 6 month support level around $122 that I had been waiting for. So I sold TLT Jun$116/111p vertical spreads with the short strike Delta of 0.20 as planned for a credit of $0.60 and 45 DTE. TLT was trading around 121.9, which was a bit below the lower Bollinger band. The next major level of support I saw was around $118. Since it was above the short put strike, I think chances of success are good enough for the trade. Now I have used all the trading power for the monthly cycle and will spend time manage these three positions.


  1. That looks like a good risk-reward trade given the sharp decline over the past week. I put on a 118-136 June strangle in mid April and was forced to push the puts out to 113 once we broke trend and 200D at 123 on Monday. Nice recovery today but job numbers tomorrow will be all important.

    1. Hi Mark,

      I looked at the trade from high probability perspective. Due to the extended drop below Bollinger band, I considered it a high probability to revert to normal. If I calculate the credit/risk, the reward to risk ratio is far below the 2:1 desired by many directional traders. Your put at $113 seemed to have a nice range now.

  2. Hi Charles,
    I'm really enjoying your blog, lots of very helpful insights. Quick question. I note in your charts you have a P&L below the price chart. How can I reproduce that in my own ToS charts? Thanks.