While TLTW Crawled, Our TLT Strategy Sprinted

Summary

• Buy-write ETFs like TLTW offer high yields but ugly mid-to-long term total returns due to rigid covered Call strategies, especially during volatile markets.
• I'm neutral to slightly bullish on TLT mid-to-long term, favoring active and flexible strategies over TLTW for superior risk-adjusted returns and adaptability.
• TLT's liquidity and relatively high implied volatility make it ideal for selling options, like a covered Call or a bull Put Spread.
• My bull Put Spread strategy implemented at the end of January returned ~37%, compared to less than 2% for TLTW.

Article Thesis

I can understand the desire of income-oriented investors to secure a double-digit dividend yield through these buy-write ETFs. But when it comes to total return, the landscape is bleak. That is because these ETFs generally implements a mechanical one-month near ATM (At-The-Money) covered

Analyst’s Disclosure:I/we have a beneficial long position in the shares of TLT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have a bull Put Spread position on TLT.