We hold a long-term position of 200 shares with a 120.36 cost basis. Last week’s funk generated a bearish impulse leg on the daily chart, so it’s time to reef the sails. Offer two Oct 6 128 calls short for 0.74, good through Tuesday. If TLT is trading above 127 .20, you should raise the offer on the calls by approximately one cent for each three-cent rise in the underlying. We’ll need a little pop in the early going to fill this order, but check the chat room in any case, since I may change my guidance. This could include instructions to buy put options to give us more protection if T-Bonds should come down hard in the coming weeks. _______ UPDATE (Sep 19, 6:02 p.m. EDT): Rallies have been too feeble to provide any covered-write opportunities. Despite the likelihood of a bounce from an HP support a 125.58, I’ll recommend that you short two Sep 29 126 calls on the opening at-the-market. _______ UPDATE (Sep 20, 5:17 p.m.): We shorted two calls on the opening for 0.80, the high of the day. Do nothing further for now. _______ UPDATE (Sep 25, 9:59 a.m.): Let’s roll into Oct calls via a calendar spread, since the rally will give us an opportunity to get more protection than the 0.80 we received when we shorted the Sep 29 126 calls against our shares a while back. Specifically, I’ll suggest selling the Oct 13/Sep 29 126 call calendar spread for a 0.40 credit, day order. The spread will narrow if TLT moves higher, but for now don’t take less than 0.40. _______ UPDATE (Sep 25, 11:19 p.m.): I’ve managed to trap myself after shorting near the low. For today, to offset our slightly negative-gamma exposure, bid 126.74 for 100 shares, day order. ________UPDATE (Sep 28, 11:14 p.m.): We bought a round lot on the opening for 126.56 on Tuesday, giving us 300 shares with a average cost of 122.42. Reduced by the $160 premium we took in for the Sep 29 126 calls gives us an effective cost basis of 121.89. Do nothing further for now._______ UPDATE (Oct 23, 11:20 p.m.): Our position, although nicely profitable, has become stale and is affecting my thinking. Sell the stock on the opening and we’ll start fresh when the opportunity is right._______ UPDATE (Oct 24, 10:28 a.m.): TLT opened on a gap near the so-far low of the day, producing a long-term gain of $285. Good riddance to the position. It has been an albatross.
