Opening (IRA): TLT Jan 17th 2025 100 Covered Calls
Comments:
Doing something long-dated here in 20 year+ paper to get in at a cost basis that is coincident with a 10 year yield at 4.10%.
Metrics:
Buying Power Effect/Cost Basis: 91.40/contract
Max Profit: 8.60 ($860)/contract
ROC at Max as a Function of Buying Power Effect: 9.41% (Excluding Dividends)
ROC at 50% Max as a Function of Buying Power Effect: 4.70% (Excluding Dividends)
Delta/Theta: 49/1.00
Will look to roll out the short calls at intervals if they're in profit to reduce cost basis further. They're currently marking at 7.00/7.25 with the only available expiry to roll out to in Jan of 2026 (so I'll be forced to sit on my hands for "a bit").
Doing something long-dated here in 20 year+ paper to get in at a cost basis that is coincident with a 10 year yield at 4.10%.
Metrics:
Buying Power Effect/Cost Basis: 91.40/contract
Max Profit: 8.60 ($860)/contract
ROC at Max as a Function of Buying Power Effect: 9.41% (Excluding Dividends)
ROC at 50% Max as a Function of Buying Power Effect: 4.70% (Excluding Dividends)
Delta/Theta: 49/1.00
Will look to roll out the short calls at intervals if they're in profit to reduce cost basis further. They're currently marking at 7.00/7.25 with the only available expiry to roll out to in Jan of 2026 (so I'll be forced to sit on my hands for "a bit").
Trade active:
The 2/1 divvy will be .310122/share. Resulting cost basis: 91.40 - .31 = 91.09.
Trade active:
The 3/1 divvy will be 0.295234/share. Resulting cost basis 91.09 - .30 = 90.79.
Trade active:
The 4/1 divvy will be 0.312425/share. Resulting cost basis 90.79 - .31 = 90.48/share.
