The only options I had set for March options expiration were the five TLT March $149 puts I sold to cover my short TLT position. They expired deep in the money today and my short shares were “put” away. I entered this TLT position beginning back in January 2020 when I sold 5 TLT April $149 naked calls that were assigned. After that initial assignment, I sold more naked calls further out of the money and sold covered puts to cover the costs of having to pay the short interest and short dividends on my 500 shares. Some months I sold higher strikes on the puts when TLT was peaking, but moved back to my $149 strike to be able to exit at the same price I entered the position and collect higher premiums.
Clearly, it would’ve been better to sell at a lower strike as interest rates started to rise (and bond prices fell), but after a year of being in this position, I was ready to move on and get back to selling puts on regular equities. TLT finished trading today at $134.72 and I left a lot of money on the table by buying my short position back at the $149 strike, but I made money, so that’s good.
I received $7,005.25 in premiums since January 2020, but in my spreadsheet, I didn’t track all of the dividend and interest payments I had to make while short the shares, but think it was close to $950 based on the average. So, I think I earned close to $6,000 on the series of trades. I could’ve made another $6,500 if I didn’t sell the March puts and then sold today when TLT was around $134.00. However, that’s not the plan I had to follow. My plan was to sell puts to cover my position and it worked, just not as well as it could’ve.
I come back to TLT on a regular basis and have done well on it over the past nine years. Maybe next time I’ll time the bond price decline better or at least not get bored with the short position and sell such high strike puts as TLT was fading. I don’t know how to figure out my percentage gain on the series of trades, because for the first few months, I didn’t factor in my exposure and had no cash set aside to cover the position. As TLT peaked, I had to pull back on other positions to leave room for margin. Now that I’m free from TLT again, I need to raise my exposure to other trades. I’ll also start over with another naked TLT call or two soon to see how it goes yet again.