TLT trade ideas
TRADE IDEA: TLT SHORT CALL DIAGONALWith (a) the Federal Reserve telegraphing "lower for longer," but (b) not much lower, given the practical limitations of cutting rates from here; (c) overhead resistance at ~172.50; and (d) the fact that the Fed interest rates will hike rates (modestly or otherwise) "at some point" going forward, I'm looking to short the 20 year + maturity treasury exchange-traded-fund TLT, preferably on strength back toward the 172.50 level.
While I can naturally take a short position via covered put, short via short call vertical, long put vertical, or long put diagonal,* my preference is for a setup that will give me some flexibility to roll short options out for additional time and credit if my timing is off and/or I want to re-up with a short option out in time after a given leg is pulled off at or near worthless. Consequently, I'm opting for a short call diagonal here with a slight twist: laddering out the short calls and buying fairly cheap longs equal to the number of contracts in my ladder. Here, the back month longs are going for .30 a pop, so I'm giving up some credit to define risk and/or make it "street legal" in a cash secured environment, where most brokers won't allow you to sell naked shorts, and for cheaper than I could potentially do a covered put.
That being said, this setup isn't "cheap": buying power effect: 96.10; max profit on fill: 2.97, which is 3.09% ROC, assuming everything expires worthless, and I don't re-up any short legs. Naturally, the ROC%-age will be better if everything expires worthless, and I can re-up with the short call a couple of additional times. The November short call's paying 1.06; the December, 1.34; and the January, 1.47, so it's conceivable I could milk another 2.00 in credit out of the thing for around 5.00 total over the life of the setup, assuming I don't have to roll broken calls out in time.
Alternatives:
(a) Buy the January 21st '22 160P
(b) Sell the January 21st '22 160C
... for a 3.25 credit at the mid price. This creates a static -100 delta short position.
(c) Sell the November 20th 159P
... for a 2.06 credit.
Manage like a covered put, but without being in the stock. This setup should be way cheaper to get into, at least on margin; it's likely a prohibited setup in a cash secured environment for most brokers.
* -- The long put diagonal is generally my go-to when I want to take a short position, but want time for it to work out or to reduce cost basis over time. Unfortunately, long-dated back month high delta long puts were unsatisfactorily illiquid to do this, although maybe I'll have better luck pricing things out during live market hours.
UPDATE (IRA): TLT NOVEMBER 20TH 165 COVERED CALLSLast update/refresh of existing positions before I move on to new trades ... .
Here, an "about as simple as it gets" covered call setup in my IRA in 20 year maturity + treasuries with a current yield of 1.64% and paid .19014/share in June (around $19 per one lot) versus a 30-days 'til expiry, one standard deviation short call premium of .78 (currently the September 25th 172 short call), just to give you some idea of what aspect of the setup is paying.
My last acquisition was around $110/share, and I'm inclined to take my money and run at historic interest rate lows, since I think that these have a practical upper bound and will necessarily decline in price when the Federal Reserve gets around to unwinding some of its pandemic-related easing (which is a "who knows when" sort of thing).
Previously, to accommodate some of the downside risk, I overwrote calls using call diagonals (See Post Below) and may do so again here while I ponder whether the buying power tied up in this position is "worth it" for the dividends and/or the short call premium. As a function of stock price, the .19 dividend plus the .78 30-day risk premium for one standard deviation calls is .59% of the underlying price (7.02% annualized) versus the 30-days 'til expiry one standard deviation short put currently paying .60 (.36% of the stock price, 4.34% annualized), so there is some advantage to staying in covered call versus selling out-of-the-money puts from a bang for your buck perspective, particularly since this is a cash secured environment.
That being said, overwriting can be somewhat buying power intensive and can lead to some headaches managing the additional calls if price rapidly gets away from you to the upside.
TLT Complex (W), (X) , (Y) pattern On the Daily time frame, TLT in a complex (W), (X), (Y) measured move targeting the 175-180 level. Looking to close out all longs on TLT into 175-177 range.
TLT Complex (W), (X) , (Y) pattern On the Daily time frame, TLT in a complex (W), (X), (Y) measured move targeting the 175-180 level. Looking to close out all longs on TLT into 175-177 range.
TLT LONG9/21/20
bonds and yields have one more leg up before the world loses faith in both the treasury and fed. potentially as high as 198+
highest speculative short positions on TLT in 2020 as well
Iron TariHi guys!
This is a new iron condor, as you see for the green histogram there are no probability on the screen. This is because under these circumstances, 2weeks 4% strike, we never had a loss.
Sure the premium is not that much, but we like it!
Enjoy your wallet!
Tari.
Cup and HandleTrying to break out
Stop under C
NV is high
Top 10 Holdings
United States Treasury Bonds 3%5.12%
United States Treasury Bonds 2.5%5.10%
United States Treasury Bonds 2.88%4.99%
United States Treasury Bonds 3.13%5.17%
United States Treasury Bonds 2.75%
Not a recommendation
OPENING: TLT OCTOBER 16TH 156/169 SHORT STRANGLE... for a 2.34/contract credit.
Notes: A bet that this doesn't move a ton in the next 45 days. Break evens at 153.66/171.34; delta/theta .31/5.80.
TLT - Reverse head & shoulders formingReiterating my long stance on bonds. I see two possible outcome which could ignite TLT back to its previous high.
1) The broader market gets back to it's previous high in which case I think TLT will likely follow as institutions hedge on the way up
2) We go for a deeper sell of in the broader market completing an ABC correction which may lead to a flight of safety. AKA inflows into the Dollar and possibly bonds
So for those reasons I'm fairly confident the price will stable here and I am expecting a trend continuation.
Bond Market Warned of Corrections 9/6/2020TLT at the daily view.
This is a project that my trading team and I are conducting. This is 8 of 9 charts (available on Trading View) that searches for clues for an imminent correction by using both June and September 2020 cases. It's a comprehensive overview that connects the charts volatility , trends, divergences, credit, and currency strength.
The bond markets warned of a correction in the stock market a few days before June and September's correction. Bonds ripped to the upside a few days prior to the ES, NQ, and RTY correcting. The previous top and fall back in August 7th was due to the inflation scare by the PPE report.
$TLT - Watching 166 break. Watching for a break about 166. The profit potential with Low IV is sweet. You can just go outright and buy a call.
IVP - 10%, shows how no one wants to decapitate the risk here. The market is expecting no risk in Bonds. Is it true?
[Long] TLTStrong move out of this wedge suggests that we are ready to go.
The economy is a total disaster and the US debt and deficit suggest they will never stop printing (and suppressing bond yields). As rates go toward zero TLT should have some good upside from here.
The equity market may top on this, or it may not (who knows).
TLT may be bottoming outFrom the chart we see that a 1.27 extension of a recent impulse wave down hit with perfection. Coupled with bullish MFI divergence its probable that if the recent low holds TLT is getting ready to reverse to the upside. It is recommended for safety to look for a bullish trigger before entering long but with a pre-defined stop-loss/ exit level entry Monday may be warranted.
