Options activity in the iShares 20+Year Treasury Bond ETF (TLT) has shown a significant bullish trend, with traders purchasing over 175,000 call options compared to just under 40,000 puts. This surge in bullish calls comes amid a backdrop of rising yields, particularly in long-duration bonds, which have recently hit 19-year highs.
Notably, a large trader executed a bullish call spread by buying 10,000 calls at the 85-strike price for $1 million and selling 15,000 calls at the 90-strike price for $375,000, indicating a belief that TLT could rise by 8% to levels not seen since March. The TLT ETF increased by 0.9% to $83.30, marking its highest price since late July.
This trend in bond trading is significant as a rally in long bonds could lead to lower rates, which would be beneficial for equity markets. Investors are also anticipating key economic data, including the Fed's preferred inflation gauge and Nvidia's earnings report, which could further influence market dynamics