Options Traders Signal Potential Bottom for U.S. Treasury Bonds Amid Strong Auction Demand
A growing number of options traders are signaling a potential bottom in the ongoing sell-off of U.S. Treasury bonds, with increased call buying on the iShares 20+ Year Treasury Bond ETF (TLT). On Wednesday, trading volume was significantly above average, and nearly all top contracts were calls, indicating bullish sentiment among investors betting that yields may have peaked. The most popular trade centered around the TLT's October expiry options at an 82-strike call. A large buyer spent over $250,000 on these contracts just before a strong rally in bonds following a successful auction of 10-year notes. This activity suggests traders are optimistic about near-term bond price recovery. Jim Perry from Perry International Capital Partners noted the 'bullet bid' at the auction and suggested that demand for Treasuries remains robust, with yields potentially topping out. Meanwhile, similar bullish sentiment has emerged in rate-sensitive sectors like utilities, where put-selling increased as investors anticipate a slowdown or reversal of recent declines.
Tickers: $TLT