ZB was up to 122'00 earlier today and that represented a 3'00 move off the bottom from just three trading days ago. Granted we had reached over sold levels and the move down the previous week was also extremely large. However, I just don't see a sustained move up in bond prices and I'm willing to get short if it does, so I sold the JAN11 123 for a little over a point. I would gladly get short at that level anyway so what this does for me is gives me a little pay day in case we don't actually get up there and thus giving me a chance to get short the underlying. I had some good fortune with timing on this as we ended up closing lower on the day and then going even lower in after hours. Since there is still 32 days until this option expires and as of the close I captured over 25% of the possible profit, any further move down will make this a candidate for early exit with an eye on shorting another option on future price increases.
Update 12/29/10: My buy to cover on the original short call was not triggered again today. I decided to short another 123 strike call based on the 2'00 up move today. I'm leaving the buy to cover on the first one at 0'14. With 23 days left to go I'm willing to leave something on the table in exchange for another shot at shorting again as it looks like we might be in a consolidation range now.
I doubled down on the short 123 strike call today. Click original post for updated charts.
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