$TLT put buyers double money

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

On Jul. 8, Market Rebellion’s Unusual Activity programs flagged the the purchase of 10,000 Weekly $147 puts, expiring next Friday, Jul. 23, for $1.19 with shares at $148.60. Volume was clearly above the previous open interest of 73contracts, indicating that this was a new position.

Those puts have traded for as much as $2.84 so far this session, over double their purchase price. The stock fell 2.64% 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 by 0.83% to $145.13. The exchange-traded fund declines as yields on longer duration U.S. Treasuries rise.