ProShares UltraShort Lehman 20 Year Treasury (TBT) Covered Calls

TBT is a leveraged exchange-traded fund designed to provide twice the inverse (-2x) of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. It is primarily used by tactical traders seeking to hedge against or profit from rising long-term interest rates. The fund achieves its objective through derivatives rather than physical bond holdings and resets its leverage daily.

You can sell covered calls on ProShares UltraShort Lehman 20 Year Treasury to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for TBT (prices last updated Fri 4:16 PM ET):

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The ProShares UltraShort 20+ Year Treasury ETF (TBT) provides sophisticated investors with leveraged, inverse exposure to long-term U.S. Treasury bonds. By aiming for -2x the daily return of the ICE U.S. Treasury 20+ Year Bond Index, the fund is structured to increase in value when long-term bond prices fall—which typically occurs when interest rates rise—and decrease when bond prices rise.

Because the fund relies on derivatives such as futures contracts and interest rate swaps to achieve its leverage, it does not own the underlying Treasury securities directly. The fund undergoes a daily rebalancing process to maintain its target leverage ratio. This daily reset mechanism is critical for investors to understand, as it can cause the fund's long-term performance to diverge significantly from the inverse performance of the benchmark over periods longer than a single day due to compounding effects.

Competitive Landscape

TBT operates in the highly specialized inverse fixed-income space. It competes with other products that provide similar exposure but at different leverage levels or tracking parameters. Key competitors include ProShares Short 20+ Year Treasury, which provides -1x exposure, and ProShares UltraPro Short 20+ Year Treasury, which offers more aggressive -3x leverage.

In the Direxion lineup, the fund competes with the Direxion Daily 20+ Year Treasury Bear 3X Shares, which also targets a -3x return for those seeking maximal bear exposure. Investors looking for a more traditional long position in this segment typically utilize the iShares 20+ Year Treasury Bond ETF, which represents the "bullish" baseline that these inverse funds seek to hedge against. The choice between these instruments often comes down to an investor's specific risk tolerance, holding duration, and leverage preference.

Strategic Outlook and Investment Usage

TBT is exclusively intended for short-term tactical trading and hedging, rather than long-term buy-and-hold strategies. The compounding effect inherent in daily-reset leveraged ETFs can result in "volatility decay," where the fund loses value in choppy, sideways markets regardless of the initial trend. Consequently, the fund is best suited for traders who have a high conviction in near-term interest rate movements and the discipline to monitor their positions closely.

Strategic usage often involves using TBT to protect a portfolio against rising interest rate environments that might negatively impact other fixed-income holdings. Given its significant liquidity and robust options market, it is also a preferred vehicle for executing directional bets on the yield curve. Investors should be aware of the higher expense ratios associated with this complex strategy and the inherent risks of dealing with derivative-based inverse exposure.

Want more examples? TBPH Covered Calls | TCBI Covered Calls