$TLT puts yield overnight gains

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

Yesterday on Dec. 19, Market Rebellion’s Unusual Option Activity Service found that 50,000 March $95 puts were bought for $0.85 to $0.88 above the existing open interest of 8,073 contracts with shares at $105.68.

Those puts have traded up to $1.39 today, over 50% more than their purchase prices. The ETF declined 2.09% in the same time period, a large move but nowhere near that of its options on a relative basis.

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.

The TLT was last down 1.88% to $103.33.

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