Options Traders Bet on TLT Rebound as 10-Year Auction Demand Surges

Options traders are positioning for a rebound in long-dated Treasuries after a sharp selloff, with bullish call volume in the iShares 20+ Year Treasury Bond ETF (TLT) surging on Wednesday alongside strong demand at a 10-year note auction. TLT options volume ran 50% above its 30-day average, with traders buying nearly 370,000 calls versus fewer than 100,000 puts, according to Cboe LiveVol and SpotGamma data. Nine of the ten most active contracts were calls. The heaviest bet was on Oct. 30 $82 calls, quoted near $0.10, with about 16,000 contracts traded. One aggressive buyer entered at 10:01 a.m. ET, committing at least $250,000 to $80 and $82 calls across expirations — the day's largest purchase in month-end contracts, made before the 10-year auction. TLT must recover roughly 6% from its Sept. 22 level for the wager to pay off; the selloff had pushed 30-year yields above 5.6%. Perry International Capital Partners CIO Jim Perry said the strong 10-year auction showed investors willing to buy at market prices. A 30-year auction Thursday at 1 p.m. ET is the next test.