Monday, September 12, 2011


As Barron's outlined a couple weeks ago, it appears that Fed Chairman Bernanke is revising his QE III to the policy of the '60s - to sell short term (driving rates up) while buying long term Tsys (driving rates farther down).
I just put on a fairly safe ( in my view) trade to capture @ 9% annualized returns:
Buy the TLT at 114 while selling an ITM covered call of Dec. 106 (safely below). The "extrinsic" call premium - that which is not part of the ETF in-the-money price- is $1.55 and the MONTHLY dividend is about 3.5%, combining to make 2.25% over the three months, or 9% if done 4 times. Beats less than 2% on the 10-year TSY.

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