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On the watch: iShares 20+ Year Treasury Bond ETF call options

Davis MartinDavis Martin ·

The set-up: Bonds have sold off over the last couple of weeks but recent price action and an overwhelming amount of uncertainty in the world have given me reason to believe that the iShares 20+ Year Treasury Bond ETF (TLT) can run to the high $128’s from Wednesday’s close of $123.96.

Whenever there is this much global worry and headline risk, I’m looking at the safe havens, the things the public runs to in times of mistrust and trouble. Right now, that has me ready to pile into calls on TLT and the Van Eck Vectors Gold Miners ETF (GDX) when the timing is right.

What I’ve done: I already own TLT August 18 $125 call options, which I bought on July 5. As disclosed to members at my Daily Profit Machine site, I considered these options a half-position, and I’m planning to double up if the market moves my way.

What’s next: At this point, I believe my current holding may hit a profit of 10 percent or more by the end of the week. If not, I’ll probably hold off until next week to buy more to avoid any theta loss – time decay affecting the value of the options – over the weekend.

I’m no longer feeling that I need to double the size of my position any more, given the recent run-up in TLT which I believe is just a beginning. I’d buy more on a dip, repeating my trade if it’s possible for something close to the same margin. I’ll stop out of my position if TLT trades below $123.

As for GDX, it’s on my watch list. I’m still waiting for it to form a pattern that convinces me it’s a go.

Bonus: Beyond playing TLT I’m looking to buy TMF, the Direxion Daily 20+ Year Treasury Bull 3x ETF today around $20/share with a 5 percent profit target and stop at -3 percent.

Jeff Bishop of TopStockPicks.com has already bought TMF; here’s why


Davis Martin is the head trader at Dailyprofitmachine.com. He trades SPY Calls and Puts and swing trades mid-large cap stocks and stock options. Davis doesn’t own any shares of TMF or GDX, but is holding TLT calls, and will trade TLT calls and buy TMF as described in this commentary.

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