Tuesday, May 28, 2013

Closed Bond(TLT) Covered Call Position

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page.

DESCRIPTION: iShares Barclays 20+ Year Treasury Bond
TRANSACTION TYPE:  Closed June $121 Call
TRANSACTION RATIONALE:  As discussed  here another covered call candidate is the long term bond ETF.   US treasuries pulled back over the past week and CCI took advantage of this pull back to harvest option premium in the position. The June covered call trade resulted in a $1.41/contract gain to offset the drop in bond prices.  At the moment, CCI does not have a covered call position in TLT but will look to re-establish the position if the price bonces back and/or after dividends are paid early next week.
TRANSACTION DATE: Tues.  May 28, 2013
Action: Buy to Close
Exp. Date: June 22, 2013
Strike: $121
Price: $.20

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