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Finished TLT Position

Tuesday, November 22, 2016 14:48
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The last of my TLT limit orders hit this afternoon and I am finally completely out of my long series of TLT trades. While TLT was trading at $121.40, I bought to cover 500 shares of TLT at $121.40 and bought to close five TLT December $130 covered puts for $8.94. The combined order sold for $130.34 and I paid $65,176.41 including $6.41 in commission.

TLT dropped as I expected when I originally sold naked calls in September 2015, but it took a detour to $143.59 in the meantime and clearly I didn’t expect that much of a spike. The trade cost me an overall profit for 2016 since I had to sell some of my long positions for a loss after Brexit and had to buy back some of my short TLT shares far above what I wanted to for an additional loss, thanks to margin calls.

The trade had the right idea behind it, but I went too big with my position and didn’t have the cash to back it when it went against me for a few months. I should’ve hedged, but got greedy thinking that history would repeat and there would be a lower ceiling on the ETF. I was wrong and was forced to re-learn a lesson I had been schooled on when I first started trading options. Now I’ll have to see if this lesson really sticks with me or if I will remember this lost year when I debate selling so many naked calls again.


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