$TLT calls yield gains for bulls

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

On Monday, on Jun. 22, Market Rebellion’s Unusual Activity programs flagged the the purchase of 12,318 Weekly $163.50 calls, expiring today, in two prints for $0.60 and $0.61 with shares at $162.34. Volume was clearly above the previous open interest of 9,058 contracts, indicating that this was a new position.

Those calls traded for as much as $1.77 so far this session, nearly 3 times their purchase prices. The stock rose 1.77% 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 up to an intraday high of $165.32 earlier in the session but pulled back some, still up 0.9% to $164.97 today. The exchange-traded fund has remained elevated as investors have piled into bonds for a so-called safe-haven trade while equities have remained volatile.