$TLT put prices soar 3-fold

Option traders have more than tripled their money on downside positions in the iShares 20+ Year Treasury Fund (TLT) today.

On Oct. 7, Market Rebellion’s proprietary programs flagged the the purchase of 11,500 November $141 puts, as part of a bearish roll, for $0.95 with shares at $145.19. Volume was clearly above open the previous open interest of 6,478 contracts, indicating that this was a new position.

Those puts have traded for as much as $3.67 this morning, more than 3.5 times their purchase price. The stock has fallen 4.72% 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 is currently lower on the session by 0.85% to $138.40. The exchange-traded fund has fallen over the past couple of weeks as investors left the so-called safe-haven trade in favor of equities, which have risen over the same time frame.