Because we are working bullish plays in this vehicle in real time to tweak our edge, I will provide guidance via posts in the chat room rather than with updates in the tout section. For the latest recommendation, check out my 16:10 post on Monday. It references a potentially useful observation that comes from Steve Saville — i.e., that trend changes in the Bank Index (see inset) lead inverse changes in TLT by about 2-3 weeks. If that is indeed the case, bullish bets on TLT are warranted now, since BKX on Friday topped within 0.24 of a rally target that has been coming since February. With regard to the TLT spread, we are keying on the 117 strike, but the precise details are divulged in the chat room. _______ UPDATE (9:06 p.m. EDT): Based on explicit instructions I provided in the chat room this morning beginning around 9:40, subscribers were able to buy the Nov 22 / Oct 3 117-strike calendar spread 40 time for 0.80 (or less). For now, do nothing further. The spread closed @ 1.08, which, in promotional hype, equates to an annualized gain of a zillion percent. _______ UPDATE (September 29, 2 a.m.): Although TLT has risen more quickly than I had anticipated, this won’t hurt us. Regardless, I’d suggest holding onto the spread rather than rolling it, at least for a day or two, since the Oct 3 calls we are short will be shedding premium rapidly as the week wears on. Keep in mind that if the underlying ETF were to rally a full point this week, the Oct 3 calls will still shed their entire, current value of 0.36. _______ UPDATE (September 29, 11:23 a.m.): TLT has rallied smartly today and is sitting at the 117 strike. This led someone in the chat room to suggest it is a good day to roll the spread forward, in part by covering (i.e., buying back) the Oct 3 calls we are short. I have suggested otherwise via this post in the chat room moments ago: “There’s a lot of juice in the Oct 3 calls we are short for us to be covering/rolling the spread today. Specifically, there is 66 cents of time premium in those calls at the moment — every penny of which will vanish by Friday’s close (or sooner if TLT continues higher). Since we’ve got on the position 40 times, covering the Oct 3 calls today is tantamount to giving up $2640 of potential gains.” To repeat: There is no rush to cover the spread (by shorting the Oct 10/Oct 3 calendar spread 40 times. It can wait till later in the week, when the short Oct 3 calls begin to fade rapidly. ______ UPDATE 12:12 p.m.): Here’s some timely targeting information that I just posted in the chat room: On the 15-minute chart, the stock topped today a penny from a 117.15 target that comes from these coordinates: A=113.02 on 9/18; B= 115.55 on 9/24. Using the nice, sharp one-off A=112.85 (also from 9/18) would allow just a tad more upside here, to 117.34, but that would probably be it for a while. The take-no-prisoners rally has left two big opening-bar gaps in the last three days, so TLT is due for a rest and a pullback. Keep in mind, simply, that our focus is on the price we get for selling the Oct 3 / Oct 10 calendar spread. That is the ‘roll’ we’re doing. The spread can be sold for about 0.25 at the moment, but its maximum potential come Friday would be 0.60 or more. It may also be to our advantage to roll the strike higher, shorting Oct 10th 118- or even 119-strike calls when we cover the short Oct 3rd calls. _______ UPDATE (October 1, 4:08 p.m.): We’ll stick to our game plan, rolling on Friday by selling the Oct 3/ Oct 10 117 spread. We could get 0.27 for it now, and that won’t change much even if TLT continues higher. However, we would reap a bonanza if TLT drops back toward the 117 strike between now and Friday.
