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 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.