TLT:
Quote:
The TLT Treasury exchange-traded fund is hitting record highs, but its option activity is led by put buying today.
The iShares Barclays 20+ Year Treasury Bond Fund is up 2 percent to $125.48, off an all-time high of $125.75 reached after it gapped higher this morning. The TLT, which was down at $96 a year ago, has been on a steep uptrend since hitting the $110 level in March.
The July 119 puts that top the action, indicating that someone believes that the stock will revert to its mean price. More than 10,000 of those puts have traded against open interest of 1,316, according to optionMONSTER's Depth Charge system. The puts were bought in institution-size blocks for increasingly high prices, with a print of 3,700 going for $1.17 and 1,266 for $1.19.
The put buying is not tied to any trading in the underlying shares identified by our systems. But this fund is correlated with many instruments, including futures, so the puts could be a hedge or a relative value play in a number of ways. The inverse correlation of the TLT with the S&P 500 is usually quite high, running near -1, but it currently sits at -0.5.
.................................................................................Option Monster
http://finance.yahoo.com/news/treasury-etfs-hit-time-highs-135701135.html
http://blogs.barrons.com/incomeinve...cludes-pratfall-at-1-620/?mod=BOL_hpp_blog_ii
http://finance.yahoo.com/q/bc?s=TLT&t=5y&l=on&z=l&q=l&c=
With TLT at 126.14 Compare:
(closing Prices)
Long 119 put, 119/114 Bear Put Spread and 125/130 Bear Call Spread:
Strikes.........119................119/114.........125/130
At Risk.........113.................... 77................316
Price.........Long Put..........Put Spread.....Call Spread
110..............779....................423...............184
115..............290....................332...............184
120..............(113)..................(77)..............184
125..............(113)..................(77)..............184
126..............(113)..................(77)................69
130..............(113)..................(77)..............(316)
135..............(113)..................(77)..............(316)
