Options Trading News

April 12, 2013  Fri 2:45 AM CT

An enormous trade is looking for the TLT Treasury exchange-traded fund to fall in the next week.

More than 30,000 each of the April 118 and 117 puts traded in the iShares Barclays 20+ Year Treasury Bond Fund yesterday. The 118 puts were bought for the ask price of $0.22 and the 117 puts sold for $0.13 in prints of 21,308 each.

This bearish vertical spread cost the trader $0.09 to open, which is the amount at risk if shares remain above $118. The maximum potential gain is $0.91 if the TLT falls below $117 by expiration a week from today. (See our Education section)

The TLT was up fractionally yesterday, closing at $120.14. It was above $123 last Friday but below $117 two weeks ago.

More than 105,000 TLT options changed hands overall yesterday, compared to a daily average of 34,000 in the last month. Puts outpaced calls almost 4 to 1, a reflection of the session's bearish sentiment.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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