modified covered calls on BOND

Discussion in 'Options' started by luisHK, Feb 11, 2013.

  1. luisHK



    I have a sizeable position in BOND that I intend to buy and hold and would like to add income to it. Yet options on BOND are illiquid with a wide bid ask spread.

    Does it make sense to sell calls on related products, like ZB and ZN and just cover if/when those get assigned? Any help would be apreciated, on the products I might sell calls and the proper percentage ? also in my portfolio it would mix with es strangles on the longer term ( also other equities positions but on shorter term)
  2. luisHK


    I meant ES SHORT strangles.

    Checking ZB and BOND volatility, I would be selling monthly 100k notional ZB calls (rougly 1%otm) for every 300k BOND, but guess there are more suitable set up. not so sizable position seen like this, this doesn't amount to that many ZB calls . nolol.