I have no idea what you are talking about
Here's a little help:
Rather than keep cash in my account I automatically move almost all cash into treasuries.
This was a good plan back when treasuries were paying near 4%, is less a good idea now that long term treasuries are paying in the range of 2-3%... but it is still better than cash. (and I bought my treasury hedge a few years ago)
What you are getting for treasuries now depends on when you bought them... they used to be cheaper but are relatively high now and thus have less yield.
http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
I use mostly 30 year treasuries which Bloomberg says is yielding 3.15%. ( a number I'm skeptical of).
TLT is not a stock. It is an ETF that tracks a bond index and I along with many other people use it as a proxy of what my 30 year treasuries are yielding. It gets a little less than the 30 year treasuries... but it's approximate.
TLT:
The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. 20+ Year Treasury Bond Index. The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. The underlying index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of 20 or more years. As of April 30, 2012, there were 18 issues in the underlying index.
I maintain a 100K trading portfolio that I keep at about 2/3 treasuries.
The remaining 1/3 I use to margin my options trades. When I need cash I convert treasuries into cash. Usually when I have excess cash I buy more treasuries... but not if treasuries are expensive. If they are expensive I'll hold the cash until they are cheaper. (this is not quite correct but it will do). e.g. recently I put some cash into WMT spreads because treasuries are too high)
So when you say to me how much 'treasury commitment' do I need to provide for my spreads I compute that from the current status of TLT.
For all intents and purposes TLT = Treasuries.
Remember TLT is not a stock it is a US Treasury Bond Index ETF.
BTW when you hold TLT you get paid your interest every month:
http://finance.yahoo.com/q/hp?s=TLT+Historical+Prices
If you remember I told you that rather than invest in naked short puts I get a higher yield by going to the spread and having enough cash to buy the stock if put... but that I hold that cash in treasuries because, unlike margin, treasuries pay me interest.
The above calculations show how that works.
I won't go into treasury spreads because I am afraid that is going too deep. Suffice it to say that I can, instead of buying treasuries, do a treasury spread that yields a much higher return than treasuries themselves and are just as safe... or even more safe.
SO:
If I do an option spread and I get put on the short option I am covered either with cash or with treasuries which are a proxy for cash that earns interest.
Another BTW: there used to be brokers that would take treasuries to count toward your margin... but I don't think that is true any more. Since I have a cash account it doesn't matter to me.
Here's a little help:
Rather than keep cash in my account I automatically move almost all cash into treasuries.
This was a good plan back when treasuries were paying near 4%, is less a good idea now that long term treasuries are paying in the range of 2-3%... but it is still better than cash. (and I bought my treasury hedge a few years ago)
What you are getting for treasuries now depends on when you bought them... they used to be cheaper but are relatively high now and thus have less yield.
http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
I use mostly 30 year treasuries which Bloomberg says is yielding 3.15%. ( a number I'm skeptical of).
TLT is not a stock. It is an ETF that tracks a bond index and I along with many other people use it as a proxy of what my 30 year treasuries are yielding. It gets a little less than the 30 year treasuries... but it's approximate.
TLT:
The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. 20+ Year Treasury Bond Index. The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. The underlying index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of 20 or more years. As of April 30, 2012, there were 18 issues in the underlying index.
I maintain a 100K trading portfolio that I keep at about 2/3 treasuries.
The remaining 1/3 I use to margin my options trades. When I need cash I convert treasuries into cash. Usually when I have excess cash I buy more treasuries... but not if treasuries are expensive. If they are expensive I'll hold the cash until they are cheaper. (this is not quite correct but it will do). e.g. recently I put some cash into WMT spreads because treasuries are too high)
So when you say to me how much 'treasury commitment' do I need to provide for my spreads I compute that from the current status of TLT.
For all intents and purposes TLT = Treasuries.
Remember TLT is not a stock it is a US Treasury Bond Index ETF.
BTW when you hold TLT you get paid your interest every month:
http://finance.yahoo.com/q/hp?s=TLT+Historical+Prices
If you remember I told you that rather than invest in naked short puts I get a higher yield by going to the spread and having enough cash to buy the stock if put... but that I hold that cash in treasuries because, unlike margin, treasuries pay me interest.
The above calculations show how that works.
I won't go into treasury spreads because I am afraid that is going too deep. Suffice it to say that I can, instead of buying treasuries, do a treasury spread that yields a much higher return than treasuries themselves and are just as safe... or even more safe.
SO:
If I do an option spread and I get put on the short option I am covered either with cash or with treasuries which are a proxy for cash that earns interest.
Another BTW: there used to be brokers that would take treasuries to count toward your margin... but I don't think that is true any more. Since I have a cash account it doesn't matter to me.