Options traders bet on bond recovery

Trading in the iShares twenty plus year Treasury Bond ETF, TLT, was heavily call-focused Wednesday on volume fifty percent above the thirty day average. Traders bought almost three hundred seventy thousand calls versus under one hundred thousand puts.

The biggest bet: eighty two strike calls

The most popular trade was buying the eighty two strike call expiring October thirtieth, a ten cent contract that traded about sixteen thousand times. It needs long bonds to recover all lost ground since September twenty second, when TLT dropped six percent.

One buyer spent two hundred fifty thousand dollars

An aggressive buyer at ten oh one ET spent at least two hundred fifty thousand dollars buying twenty five thousand of the eighty two strike calls expiring October sixteenth and thirtieth, plus five thousand eighty strike calls expiring October thirtieth.

Strong demand at ten year auction

The trades came shortly before a ten year note auction that sparked a strong bond rally. Jim Perry, founder and chief investment officer of Perry International Capital Partners, said tens had a bullet bid and auction demand was very strong.

“Tens had a bullet bid today, auction demand has been very strong.”

Utilities show similar optimism

Options flows in rate sensitive utilities also turned bullish. On Friday, someone sold one million dollars of puts betting the sector's selloff will taper or turn around. Utilities are up about three percent since then, with little put buying Wednesday.