$TBT calls yield major profits

Bullish option traders are collecting a positive yield on upside positions in the ProShares UltraShort 20+ Year Treasury Fund (TBT) today.

On Aug. 1Market Rebellion’s Unusual Activity Service detected the purchase of 5,000 October $24 calls for $1.72 as part of a bullish roll with shares at $23.96. Open interest in the strike before the trade occurred was just 214 contracts, showing that this was a new position.

Those calls have traded up to $8.50 so far this session, nearly 5 times their purchase price. The stock rose 35.68% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

TBT was last up by 5.06% to $32.80 today.

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