$TLT yields big gains for option bulls

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

On Feb. 18, Market Rebellion’s Unusual Activity programs found the the purchase of 10,800 March $138 calls as part of a complex bullish spread for $2.66 with shares at $137.89. Volume was clearly above the previous open interest of 4,188 contracts, indicating that this was a new position.

Those calls traded for as much as $5.00 this session, nearly 2 times their purchase price. The stock rose 2.86% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

TLT was up 1.16t% closing at $141.30 today.