$TLT calls yield gains

Option traders are collecting a positive yield in upside positions on the iShares 20+ Year Treasury Fund (TLT) today.

On Nov. 15Market Rebellion’s Unusual Option Activity Service found that 8,500 Weekly $102 calls, expiring today, were bought for $0.74 with shares at $98.68. This was clearly fresh buying, as open interest in the contract was just 167 before the activity appeared.

Those calls traded for as much as $6.13 this session, more than 8 times their purchase price. The stock rose 9.34% at the same time, underscoring how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

TLT finished the session at $106.33, down 2.6% on the day.

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