I continue to hold , and to roll forward each week, the Nov 22-117/Oct 18-121 calendar spread, although it would appear that most subscribers — at least, those who have reported positions in the chat room — exited various positions profitably over the last week or so after TLT went ballistic. It is hard work to roll a spread so deep-in-the-money, but it is still possible to do so every Friday with a premium gain of perhaps 0.08-0.20 per spread. The maximum weekly value of the roll, had TLT loitered near the 117 strike, would have been around 90 cents.
Looking ahead, we’ll shift to vertical bull call spreads, legging them on with the goal of making our positions virtually riskless. As I implied earlier, this is more risky that opening a position with a spread orders as we did with the calendars. Even so, once TLT settles down from this week’s wild gyrations, we shouldn’t fear opening naked positions at projected swing lows. We can keep the size down and still get terrific leverage, especially if we are able to leg on $5 verticals at no cost. My bull market target leaves plenty of room for us to be leisurely and relaxed about this play. As the chart suggests, TLT has the potential for a run-up to 145.25 or higher, a clear Hidden Pivot target. In the meantime, we should look for it to oscillate around the 123.21 midpoint for at least a week or two before it can develop escape velocity for the next launch.