$TLT option bears triple money

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

On Mar. 22, Market Rebellion’s Unusual Activity programs detected the the purchase of 10,000 May $125 puts for $2.57 as part of a bearish spread with shares at $129.04.

Those puts have traded for as much as $7.85 so far this session, over triple their purchase price. The stock fell 6.4% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

TLT was last lower on the day by 0.76% to $119.24.