TLT has remained depressed since falling from its 2020 highs and hasn’t shown much price fluctuation since the beginning of March. This trading channel of the past few months is narrowing and likely to break before too long. I expect it to move lower, but summer trading can bring weird things to the market. That’s why I’m taking a different approach to my TLT options trades this time. In previous years, I’d start with five or 10 contracts and play it out with covered puts if assigned. This time I’m starting with only one contract, but pretty much at the money.
While TLT was trading at $139.70, I sold one TLT August $140 naked call for $2.97 and received $296.37 after paying $0.63 in commission. I plan to layer other contracts in with this one as the price fluctuates over the next few months. I’d like to get at least $2.00 per contract, so I don’t have to be so close to the money on each additional trade. I took more risk on this one since I barely have any other exposure right now.
If TLT spikes, I’ll be assigned 100 shares, which will be easy to manage. I’ll also be able to sell more naked calls at higher strikes and build a variety of possible entry points with less risk than I usually take. If TLT drops, I’ll be happy I pulled in nearly $300 from this single trade.
In other trading news, I’m thinking about naked puts on IWM and ABNB again. I’d like to see IWM move closer to its lower trend line of higher lows, close to $215. For now, IWM is finding resistance at its upper trend line of lower highs and that risk of a top is too much for my taste right now. ABNB fell hard from its spring highs and has bounced. I’m watching to see if this is much more than a dead cat bounce. Some sideways movement for a few more days could be all I need. I own some in my IRA already, so I don’t need to rush in for more, but the lofty premiums sure do look inviting.