Subscribers hold the September 20/August 16 118 calendar spread for an effective price of 0.25 after rolling out of short August 8 calls and into short Aug 116s late last week. We will continue to do this roll every Thursday/Friday, further reducing the cost of our bullish time spread. With luck, TLT will continue its advance to our 118 target, generating ever-higher levels of weekly income when we roll the spread. Ideally, TLT will be trading near 118 when the September calls we continue to hold expire, and our effective cost basis will be a negative number — i.e., a credit gained from shorting four or five weekly calls against them over time. As of Friday, the position was showing an $800 paper gain.  This profit is likely to keep growing even if the stock merely sits still or falls a bit. That’s because we’ll continue to take in premium shorting weekly options as long as they sell for more than zero.  On Friday, the August 16 calls we shorted traded between 0.06 and 0.09.

Since my outlook for this vehicle is long-term bullish,  we’ll continue to repeat the strategy used above in different time frames.  In the chat room, I have provided detailed instructions for 32 new spreads with a longer expiration date.  I’ve refrained from publishing the instructions here because I want them to be available only to paying subscribers. The information can be found in Friday’s chat room discusssion, beginning with comments I made starting at 12:54 p.m. _______ UPDATE (August 11, 11:19 p.m. EDT): I’ll use 0.90 as the price for Nov/Aug calendar spread that I detailed in the chat room, since several subscribers have reported filling at that price.  If you’re still trying, use the delta guideline provided, which at Monday’s 115.46 closing price would work out to 0.90 or so. (It calls for a 0.01 price adjustment in the spread for each 0.16  move up or down in the underlying stock.)  This is a day order, since we’ll be rolling into the September 5 calls this Thursday/Friday. If you’re getting a late start, you can initiate the position then, shorting the Seps against the continuously held Novs. I’ll provide a price in the chat room if asked. Click here for a free trial subscription that would give you access to the room, as well as to all touts, intraday bulletins and impromptu, virtual trading sessions. _______ UPDATE (August 14, 4:28 p.m.): Our original calendar spread, still working, entailed holding September 2oth 118 calls long against a rolling short position in weekly calls that commenced with the August 1 expiration. A subscriber who has followed my plan reported rolling the short side from August 15 to August 22, yielding an effective cost basis of 0.04 (!) for the position. The tracking position now has five weeks remaining to pay of at perhaps 40-to-1, and all that’s needed is for the underlying issue, currently trading for 116.33, to reach 118.  If TLT is trading 118 or higher when our Seps expire, the position profit would be equal to the value of those calls at that time, plus whatever net credit we have amassed via the weekly rolls. _______ UPDATE (August 18, 8:06 p.m.):  Monday’s selloff came exactly as expected, since TLT’s high on Friday matched a rally target that had been more than a month in coming. We should regard any pullback as an opportunity to load up on calendar spreads, but I’d like to get an idea first about how subscribers are playing this one.  Please let me know in the chat room on Tuesday so that I can continue to improvise strategies that will be easy to execute and as close to riskless as I can make them.