OPENING (IRA): TLT APRIL/MAY 159, 161/190 CALL DIAGONAL

... for a 1.83 credit; delta/theta -33.33/3.30.

Notes: Here, overwrote 20 delta calls in April and May late in the trading session to flatten net long delta'd covered calls I have on in TLT and to add a little something something to what is now a low yielder from a dividend perspective. As you can see by the chart, we're basically at all time highs since instrument inception, so it wouldn't be the worst stand-alone short I've ever undertaken, particularly since it's out-of-the-money. However, it needs to be looked at in tandem with the covered calls as an overall position and, as such, the entire show is still net delta long (i.e., primary covered calls plus this setup).

Additionally, I bought the May 190's in a number of contracts equal to the total number of short call contracts to act as throwaway longs, not only to bring in buying power effect, but to get around the general prohibition against selling naked long calls in a cash secured environment (they were .07 at the mid price, so I'm not giving up much).

Trade active:

Rolling the April 159's to the May 160's for a .70/contract credit. Waiting until May to see if I pick up any shares via my short put ladders in HYG, IYR, EFA, and XLU. If I don't get assigned, I may stay in TLT a bit longer.

Trade active:

Looked at rolling out, but am going to opt to have some of my TLT called away instead (assuming the short calls remain in the money running into expiry). The primary short calls (not pictured here) were pulled off at approaching worthless near mopex, so am now only partially covered here by the 160 and 161. Selling out of the 190's for 1.01/contract, so I made money on those (.94/$94), and on the stock given my cost basis of around $110/share. Covering the remainder of the shares via the June 195 short calls ... .

Trade active:

Rolling the June 195 calls down to the 175 strike for .76/contract. Still waiting to see if the May 161's and 160's get called away, which I'm fine with. I haven't managed to pick up shares in anything to replace them from a divvy-generating standpoint, unfortunately, but short call premium here exceeds the monthly dividend (June 5th, 28 DTE, 16 delta 174 short call pays .82 ($82) versus May 1st dividend payment of .2162 ($21.62)), so it's all good.

Trade active:

Since I've been unable to pick up any divvy yielders on my shopping list, looking to milk this position for a little while longer: Rolling the 161's from May to the June 162's for a 1.35 ($135) credit and the May 160's to the June 161's for a 1.10 ($110) credit. Remaining shares still covered by the June 175's.

Trade active:

Rolling the June 161's to the July 162's for a .63 credit, the June 162's to the July 163's for a .67 credit, and the June 175's to the July 173's for a .54 credit. The setup is now basically all covered call with laddered short call at the 162, 163, 175 ... .

Trade active:

Rolling the now 7 delta, valued at .24 July 173's to the August 174's (16 delta) for a .74/contract credit. Waiting on the 162's and 163's, which are basically right at the money and have 2.29 and 1.85 in extrinsic left in them, respectively. Regardless of what Suze Orman says, I think you now stick with "bond funds" here, as opposed to straight up bonds due to massive QE and talk of yield curve control, which may push treasuries in particular up further (with the trade-off being, of course, lower yield).

Trade active:

Rolling the July 162's to the August 163's for 2.05 and the the July 163's to the August 164's for 2.18, so we're now laddered 163, 164, 173 covered calls ... . When I can get everything at the same strike, I'll start to keep track of credits collected and the divvies to show what you can receive in terms of cash flow on this particular instrument. Up to this point in time, I generally haven't been keeping track, since I was treating it as a "never exit" position.

Comment:

I keep on revisiting the question of what I want to do with this position, and I think it may be time to bail given where rates can practically go from here (which translates to very little upside of the underlying). Another consideration is how much IV has bled out of treasuries: 30-day's currently at 16.4%, the 11th percentile of where it's been over the past 52 weeks, making call side premium collection less productive than it would be relative to being, for example, in SPY (30 day IV at 25.1%), so I'm not getting much bang for my buying power buck here. Additionally, my last acquisition was at 110 or so, so my cost basis is below that and a 50% ROC would be nothing to shun, especially in something so mundane as 20 year paper.

Trade active:

Rolled the August 163's to the November 165's for a 1.35/contract credit; the August 164's to the November 165's for a 2.20 credit; and the August 173's to the November 165's for a 6.87 credit, so it's now all November 20th 165 covered call. Assuming TLT stays above 165 through November, I'll allow my shares to be called away, since I'm not very confident that TLT stays up here long-term. I'd rather cash out and deploy the capital elsewhere in something a little more juicy and/or that is more "yield worthy."