How to Boost Your Yield on U.
S.
Treasury Securities
Instead of buying treasury securities directly from the Treasury or through a broker, buy
an exchange traded fund (ETF) called 20+ Year Treasury Bond ETF (symbol TLT).
It
trades exactly like a stock and...
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How to Boost Your Yield on U.
S.
Treasury Securities
Instead of buying treasury securities directly from the Treasury or through a broker, buy
an exchange traded fund (ETF) called 20+ Year Treasury Bond ETF (symbol TLT).
It
trades exactly like a stock and has at least 95% of its assets in U.
S.
government
obligations.
The way to boost your return is by selling a call option against your position.
The buyer
of the call option (each call option represents 100 shares) has the right (not the
obligation) to purchase your 100 shares of TLT at a certain price (strike price) within a
certain time limit.
For that right the call buyer will pay you cash (the premium) directly
into your account.
This is yours to keep no matter what.
Let’s go through an example.
Recently, TLT closed at $89.
90 per share or $8,990 per
100 shares.
You can sell a call option for someone to buy your 100 shares between now
and the third Friday in March (approx.
3 months) at $92.
00 per share.
For that right
Less
