$TLT puts yield gains for bears

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

On Nov. 24, Market Rebellion’s Unusual Activity programs flagged the the purchase of 20,000 Weekly $155 puts, expiring on Dec. 11, in one print for $0.38 with shares at $159.86. Volume was clearly above the previous open interest of 76 contracts, indicating that this was a new position.

Those puts have traded for as much as $1.45 so far this session, over 3.5 times their purchase price. The stock fell 3.14% 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 1.46% to $155.21 in morning trade. The exchange-traded fund has declined as yields on longer duration U.S. Treasuries rise.