Options Traders Call Bond Bottom After 'Bullet Bid' 10-Year Auction — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- TLT options traded heavily call-skewed Wednesday with volume 50% above the 30-day average, per Cboe LiveVol and SpotGamma — roughly 370,000 calls versus under 100,000 puts, and nine of the top 10 contracts were calls.
- The most popular TLT trade was the 82-strike call in the October 30 monthly expiry: a 10-cent contract that changed hands about 16,000 times and would require long bonds to fully recover from the Sept. 22 sell-off, which knocked TLT down 6% and pushed the 30-year yield past 5.6%.
- One aggressive buyer at 10:01 ET spent at least $250,000 on 25,000 of those 82-strike calls (Oct. 16 and Oct. 30 expiries) plus 5,000 of the 80-strike Oct. 30 calls — the largest single purchase of any month-end-expiry contract.
- The call-buying came shortly before a 10-year Treasury note auction that Perry International Capital Partners' Jim Perry described as a "bullet bid," saying demand was strong enough that buyers were filling market orders at any price.
- Rate-sensitive utilities (XLU) showed a parallel shift: on Friday someone sold $1 million in XLU puts rather than buying them, and the sector is up about 3% since amid minimal put-buying Wednesday.
- Perry said "yields may be topping out" but personally favors equities: "If yields fall, stocks will outperform bonds," noting a 30-year bond auction at 1 p.m. ET the next day as the next key test.
Why it matters: With TLT down 6% since Sept. 22 and the 30-year yield above 5.6%, Wednesday's near-4-to-1 call-to-put ratio in TLT signals a coordinated options bet that the year's bond rout is exhausting itself. A single buyer committing $250,000 to out-of-the-money 80- and 82-strike calls heading into a strong 10-year auction adds real conviction to that trade — and if yields truly top, a 3% rebound in the rate-sensitive utility sector hints at where the rotation goes next.
Ask SkimNews
