Income Trade in TLT

[Steven Place]

Treasuries are running back to their mini-flash-crash highs:

I’m expecting this market to cool off and/or pullback in the near future.

Here’s the STARTER trade:

Sell TLT Feb 125/130 bear call spread for 1.80 or higher
Sell TLT Feb 125/120 bull put spread for 1.75 or higher

If TLT squeezes higher, we will ROLL the call side higher, which will add more capital to the trade and increase the odds of success.

Target profit is 20% of risk.

[Steven Place]

This trade is blown out, and I am NOT adding to risk. Maybe if we get some stupid move by Feb opex we can close it for decent profits but the way TLT is moving I’m just going to step back and leave it alone.

[Steven Place]

Going to close this trade for a small loss here. TLT pulled back hard and it’s basically a gift that we’ve seen this much reversion.

Yes technically if I had added properly the trade would be profitable but price action really was an upside freight train all through the month of February.

Buy to close TLT Feb 125/130 call spread @3.60
Buy to close TLT Feb 125/120 put spread @.10

That puts losses at around 15 bucks per spread, which is a -11% loss vs risk. Considering full size wasn’t added, I’ll consider this small loss a “win.”

[Author]

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