On Wednesday, trading in TLT saw a significant increase in call options, with volume 50% above the 30-day average. Traders purchased nearly 370,000 calls compared to under 100,000 puts, indicating a bullish sentiment. The most popular trade was the purchase of 16,000 contracts for the 82-strike call, which requires long bonds to recover losses from a recent sell-off.
Notably, a single buyer invested at least $250,000 in these calls shortly before a successful auction of 10-year notes, which contributed to a bond rally. Jim Perry, founder of Perry International Capital Partners, noted strong demand for bonds, suggesting that yields may be stabilizing.
Additionally, there has been a shift in the utility sector, where recent trading has favored call selling over put buying, further indicating a potential change in market dynamics. Perry expressed a preference for stocks over bonds if yields decline, highlighting the interconnectedness of bond and equity markets