$TBT option bulls double money

Option traders collected a quick positive yield on upside positions in the ProShares UltraShort 20+ Year Treasury Fund (TBT) today.

Today, Jul. 13, Market Rebellion’s Unusual Activity Service detected the purchase of 7,200 July $18.50 calls, expiring this Friday, for $0.13 to $0.18 with shares at $18.21. Open interest in the strike before the trade occurred was just 5,317 contracts, showing that this was a new position.

Those calls have traded up to $0.30 so far this afternoon, about double their purchase prices. The stock rose 2.31% 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.

TLT was last up by 1.43% to $18.48 today. The exchange-traded fund has risen alongside Treasury yields.