Wednesday, January 25, 2012

TBT - New Position

A new CSP position was established today on ProShares UltraShort 20+ Year Treasury (TBT). All prices include IB commissions.

This is the third position on TBT.

This position represents a new strategy for idle cash. The idea is to earn interest at the current 30 Year Treasury rate (3.12%) or more for a period of 1 year or less. I chose the lowest possible strike and shortest expiration that met the criteria. The 14 strike provides 25% downside protection at the current price through Jan 2013, and is 20% below the 52 week low of $17.28, which also happens to be the lowest close since inception. With interest rates at historic lows, and unlikely to go much lower, this seems like a pretty safe bet and it beats leaving cash in the account at zero interest.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
1/25/2012TBTCSP Margin UsedCSP 400 TBT @ 14.00 ($5,600.00) 
1/25/2012TBTInitial Put OptionSTO 4 Jan13 14.00 Put @ 0.57  $229.70

Position Summary

Cost Basis($5,600.00)
Income Generated$229.70
Percent Income Generated4.10%
Annualized Income Generated4.17%
Net Profit If Assigned$229.70
Percent Return If Assigned4.10%
Annualized Return If Assigned4.17%
Days Held to Expiration359 days