We need to roll our August positions as there is little to no value left (good thing) and sell more premium. So far, our most conservative portfolio is up over 10% since we started to initiate positions back in early June. Even with the wild whipsaws since that time, the portfolio has managed to endure with flying colors, maintaining a nice, smooth equity curve.
All-Weather Portfolio
iShares 7-10 Year Treasury Bond ETF (IEF)
We currently own the IEF January 19, 2024, 85 call LEAPS contract at $19.00. You must own LEAPS in order to use this strategy.
If you wish to enter the position and are uncertain about which LEAPS to purchase, please refer to the reports section of your subscriber page or our latest subscriber-exclusive webinar in which I go through the process, step by step, of entering a new position of an already established position. Once referring to the reports section, you will find, based on our approach, the LEAPS contracts with a delta of 0.80 are currently the January 19, 2024, 85 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80, that has roughly 18 to 24 months left until expiration.
Here is the trade:
Buy to close IEF August 19, 2022, 105 call for roughly $0.12 (adjust accordingly, prices may vary from time of alert)
Once that occurs (or if you are new to the position and already own LEAPS):
Sell to open IEF October 21, 2022, 105 call for roughly $1.20 (adjust accordingly, prices may vary from time of alert)
Premium received: 6.3%
Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $19.00 (or the price at which you purchased your LEAPS) with each and every transaction.
We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in IEF.
iShares 20 Year Bond ETF (TLT)
We currently own the TLT January 19, 2024, 85 call LEAPS contract at $29.10. You must own LEAPS in order to use this strategy.
If you wish to enter the position and are uncertain about which LEAPS to purchase, please refer to the reports section of your subscriber page or our latest subscriber-exclusive webinar in which I go through the process, step by step, of entering a new position of an already established position. Once referring to the reports section, you will find, based on our approach, the LEAPS contracts with a delta of 0.80 are currently the January 19, 2024, 90 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80 that has roughly 18 to 24 months left until expiration.
Here is the trade:
Buy to close TLT August 19, 2022, 119 call for roughly $0.23 (adjust accordingly, prices may vary from time of alert)
Once that occurs (or if you are new to the position and already own LEAPS):
Sell to open TLT September 16, 2022, 119 call for roughly $1.16 (adjust accordingly, prices may vary from time of alert)
Premium received: 4.0%
Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $29.10 (or the price at which you purchased your LEAPS) with each and every transaction.
We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in TLT.