A week ago, TLT was trading $5 higher and I sold my second leg of 10 TLT September naked calls. This morning, while TLT was trading at $122.53, I bought to close those 10 TLT September $132 naked calls for $0.11 each and paid $114.23 including $4.23 in commission. Since I received $1,145.73 last week, I finished the one-week old position with a realized gain of $1,031.50.
I made the decision to exit before expiration soon after I made the trade. By the end of the first day, I had nearly half of my gain already. By Thursday, I decided to enter a limit order at $0.11 and with the hope of getting out by the end of this week with a realized gain of more than $1,000. It worked out even better than expected since the order hit this morning and now I can start eyeing new October strikes on any further TLT strength.
I still have the 10 September $124 naked calls in play and want to let them run for a good profit. I’m down $164 on paper right now, but the strikes are almost $1.50 out of the money and I expect TLT to stay more subdued in the coming weeks. As, we saw this morning, TLT could attempt to rally a few more times without much follow through. I’m considering the October $127 or $128 strikes, but haven’t entered a new limit order yet. I might get to it by the end of today since my next few days look pretty busy. I haven’t bothered entering a new limit order to close my remaining September naked calls since they aren’t trading anywhere close to what I’m willing to pay to get out.
The only other limit order I have in place right now is on DIS, for an October $95 naked put. If DIS dips again this week like it did this morning, my order should hit. I priced the limit order ~$0.20 above the current bid/ask to only trigger on DIS weakness. On strength, I’ll benefit with the 100 shares I’m already long.