TLT took a bold leap on Friday, exceeding our rally target by a dime and allowing us to turn an already profitable 200-share position into a covered write. Subscribers acting on explicit guidance provided here last Wednesday reported shorting two June 30 127 calls for 0.90 against stock. The position is currently showing a paper profit of about $1200, but it could tack on additional gains of up to $458 if the ETF eventually rises to the 128.40 target shown (see inset). In any event, the premium we received for the calls will provide up to $90 of cushion if the uptrend should turn balky. This was intended as a long-term play when we initiated the trade back in April. Looking ahead, if the calls we shorted expire in-the-money, we’ll roll them to a more distant expiration and keep the stock, since I expect this vehicle, which tracks Treasury bonds, eventually to move significantly above the 128.40 target. We can repeat this tactic, month by month, to fatten our total gains if TLT continues higher as I expect. The potential kicker for us is that investors who have been on the wrong side of the trade since T-Bonds reversed in March will have to unwind their positions, possibly squeezing prices into a bullish parabola. The Fed sucked investors into believing that a supposedly strengthening economy would lead to inflation, but this narrative is starting to look more and more idiotic, as is the Fed’s bluff about tightening a few more times, now that the housing and auto sectors have started to roll over. Bottom line: Recession is coming and the Fed will not be able to tighten, making our T-Bond bet look better than ever. _______ UPDATE (June 5, 3:52 p.m.): Our short sale of June 30 127 calls to effect a covered write appears to have nailed last week’s exact high. Bid 0.40 to cover them, good through Tuesday. If we can cover the calls we shorted for less than half the price we received for them this soon, it behooves us to do so. We may get a chance to re-short them later at a higher price. Each time we perform this little trick, it will effectively lower our costs basis for the TLT shares we hold. Sort of like compounding interest income at 8%._______ UPDATE (Jun 7, 6:47 p.m.): Lower the bid to 0.25 to cover the calls, good through Friday._______UPDATE (Jun 13, 12:18 p.m.):  The market makers would not let the calls trade lower than 0.27, shutting out our bid. What do we care, since these calls are headed to zero. Let’s give DaBoyz — my former colleagues — another chance, bidding 0.20 to cover the options, good through Wednesday. If the stock rallies, we’ll roll the position by selling a calendar spread._______ UPDATE (Jun15, 5:48 p.m.): Put in a stink bid at 0.15 to cover the calls, good till canceled.