Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

If you are on margin, I would suggest you buy TLT (not margined) and sell covered calls about $1 to $2 above current price and also sell (naked) puts $1 to $2 under the current price (strike month depending on how long you intend staying out of the market). If rates go down and you are "called", you get the premium on the puts , the premium on the call and TLT at a buck or so higher, a return of about 2% to 6%, plus about .4% per month (paid monthly like clockwork) in interest which is now classified as dividend and entitled to lower tax rates. If rates went up and TLT went down, by the time you come back, you own twice as much TLT (the second serving bought on margin and you don't want to hold that too long since you probably will pay about 1% to 2% more interest on that margin debt than you get on TLT), but most likely, the premium from the calls and the puts compensate for the loss in the first TLT. The risk is that you stay away for too long and interest rates are jacketed up sharply, so I would not use this for more than about two months. I am using this approach consistently for some of my fixed income funds.