I’ve established a tracking position consisting of 500 shares with a cost basis of 129.46 and five July 22 142 calls shorted last week for 2.00. The unhesitant surge past so daunting a Hidden Pivot target as the one we were using at 142.50 attests to the overwhelming power of this rally. A minor-trend ‘extension’ now points to 145.38 (see inset), a target that is very likely to be reached if TLT blows past the midpoint pivot at 143.58. Accordingly, I’ll suggest covering the calls at-the-market on the opening if it looks like TLT will begin the day above 143.64. You can assume this will occur if T-Bond futures are trading 177^05 or higher just before the bell. _______ UPDATE (July 11, 11:52 a.m. EDT): TLT opened at 143.05, never traded above 143.46 and has since fallen to 142.42, so there was nothing done on the order. For now, bid 0.60 to cover the calls, good through Wednesday. ______UPDATE (July 12, 10:48 a.m.) Cancel the closing bid for the calls. TLT has gotten hit hard enough today that it now looks likely that the calls we are short will expire worthless. If so, they will have served their purpose, lowering our costs basis by $2 while protecting us from a decline from a potential top that we had targeted and been ready for.
