July Option Investing – TMF Covered Calls

I decided to expand my portfolio and initiate a position in TMF.

Since the option volumes are lower than my current entry rules allow, I needed to find a way to protect money.  My last try at expanding my ETF selection (CZM – which now trades under the ticker YINN) was less than successful due to low option volume.

Using a buy/write order entry works around the low volume obstacle.  The order will not execute if options are not available.  The downside risk is if the options expire at the end of the month.  If option volume dries up, I either have to sell my shares or sell calls “at market”.  Anyone selling at market become a price-taker, instead of a price-maker, which decreases profitability.  And the lack of liquidity makes profits even worse for the seller.

My TMF buy/write did execute, but there was not enough volume to cover the entire trade in one transaction. You can see the lower volume reflected by the fact that the order executed in 3 segments.

Shares of TMF @ $37.79 with August 38 calls at $1.64
Shares of TMF @ $37.80 with August 38 calls at $1.65
Shares of TMF @ $37.81 with August 38 calls at $1.66


About T. Knight
Blogging about my journey to financial independence via investing for cashflow.

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