Closed TMF covered put (7/15 expiration, $125.00 strike)


Bought to close a covered put position originally entered on 7/8. It consisted of 200 shares of TMF, bought back for $117.47 (originally sold short for $125.94), and 2 put contracts with $125.00 strike price, expiring 7/15, bought back for $7.90 (originally sold short for $2.55). Total return after commission for the combined covered put position was $590.20, or $2.95/share.


Huge move in treasuries today, which brought the put deep into the money and compressed the premium on the short put. So it made sense to close this position early. In the back of my mind, I am hoping that there’s going to be a small reversal tomorrow, allowing me to do one more round-trip this week. As mentioned in the original write-up: TMF doesn’t offer weekly options, but this week we have monthly expiration.

Longer term, I think we may just have passed the peak in the bond market. I am sure there will be more crises, and spikes in bonds, but unless Trump becomes president, I don’t see the U.S. hitting a recession that would justify the current low yields.

July 12, 2016 at 9:30am · TMF · buy to close · covered put · options

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