Bond rout ending? Massive bets on bond rally dominate options market — SkimNews
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- TLT options traders bought more than 175,000 bullish calls on Tuesday versus just under 40,000 puts, according to ThinkOrSwim data, extending a pattern of call-heavy positioning that has persisted almost all summer
- Long-duration bonds have absorbed a near year-long yield climb that sent 30-year Treasury yields to 19-year highs last week, a move the source ties to Treasury Secretary Scott Bessent's announcement of expanded government bond buybacks
- The 10-year Treasury yield remains below its January 2025 high and the 5% level it crossed in 2023, indicating the long end has borne disproportionate selling pressure rather than the curve rising uniformly
- One large TLT trader built a bullish call spread: buying 10,000 November 20 85-strike calls for $1 million while selling 15,000 90-strike calls for $375,000 — a structure capped at an 8% payout at levels not seen since March
- TLT gained 0.9% Tuesday to $83.30, its highest close since July 29, while the LQD investment-grade corporate bond ETF added 0.5% as the broader bond market firmed alongside the rally
Why it matters: If the bullish call spread pays off, long-end Treasury yields would reverse from 19-year highs, delivering the rate relief the source says equity investors have been waiting for. The concentrated bet lands directly ahead of the PCE inflation report and the Jackson Hole symposium, both potential inflection points for the year-long bond selloff.
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