TLT (20yr bond ETF) is at levels not seen for over a decade. If I was a stock market investor and not an options trader, I would buy TLT at this level. It pays about 2.5% dividend and has a tremendous upside. The dividend can also be boosted by selling 1 call option against each 100 shares.
Here are some numbers: buy 100 shares at $95 = 9500. Sell the November $100 call option and collect $105 premium. If the stock remains under $100 at close of day on 18/11/2022 then you keep the $105 premium. If the stock does not move over the next 30 days and you sell your positions then you just generated a 13% annualised return.
What's even more interesting is that if the stock moves up $1 then you just generated nearly 26% annualised return with very minimal risk.
Food for thought for those who do not want to trade options and take much greater risks hoping for larger returns.
So what's my trade for today?
#SLB (#Schlumberger) earnings play with a very wide strangle. The only thing I look for when it comes to earnings plays is the price movement of the stock. If the stock doesn't have wild moves then I am fine to take the risk.
The stats
Trade Type: Short Strangle
Strike: $37.5 / 55
Expiry: 18 Nov
Delta: 0
IV Rank: 52
Premium: $0.63
Cap Req: $457
Annualised Prof at Expiry: 174%
IMPORTANT: Studying previous trades provide the opportunity to everyone to learn a great deal so I encourage you to click on the links below and digest the info.
Closed:
https://www.tycoonitos.com/community/market-comments/market-comments-20221019
Rolled:
https://www.tycoonitos.com/community/market-comments/market-comments-20220219
https://www.tycoonitos.com/community/market-comments/market-comments-20220802
Let me know what you think.
Beautiful winner!
Closed at $0.72 for an annualised profit of 199%.
I regretted getting into this trade but will try saving it.
Rolled up the put side to $46.50 for $0.44 credit.
Total credit: $1.34.
Rolled up the put side to $42.50 for $0.27 credit.
Total credit: $0.90.