Benzinga | Oct 25, 2020 08:48AM EDT

Mike Khouw Gives Update On His TLT Trade

On CNBC's "Options Action," Mike Khouw gave an update for his winning iShares 20 Plus Year Treasury Bond ETF (NASDAQ:TLT) trade.

On Oct. 16, Khouw suggested a bearish options trade in TLT and since then the ETF dropped 2.02%. Now, he has two ways to adjust the trade.

He would either sell the January $150 put for $2.50 or sell the December $155 put for $2.50. The sale of the January put gets him back $2.50 that he paid for the January $155 put and he has a potential profit of $5. He suggests this approach for traders who are hoping for a bigger spike in rates, while the sale of the December $155 put is better for traders who are looking for a total move of 20 basis points in rates.