I believe interest rates are heading down, so I bought TLT – iShares 20+ Year Treasury Bond ETF to profit from that.
This week, TLT was up over 3%.
Beautiful.
But I got greedy and wanted more, so on November 14, I sold the TLT November 17 $90 calls for 66 cents. I owned the underlying shares, so it was a covered write.
I watched the tape at the end of the day on Friday to see where TLT would close.
If it closed below $90, the option would expire worthless, and I would pocket the 66 cents.
If TLT closed above $90, I still keep the 66 cents, but I am forced to sell my shares for $90 (they get called).
With1 5 minutes to go before the close, TLT was trading at 89.95, so I assumed that’s where the day would end.
Nope.
In the final five minutes of trading, TLT exploded upwards to close at $90.04. It’s as though the Big Boyz are manipulating trading.
So, I assume my shares will get called, but that’s fine. I effectively sold shares worth $90.04 for $90.66, so I’m happy with the transaction.
Will I buy more shares and do a covered write again?
Tune in next week to find out.