- TLT options volume ran 50% above the 30-day average, with traders buying almost 370,000 calls versus under 100,000 puts and selling more puts than they bought.
- The most popular trade in the monthly Oct. 30 expiry was buying the 82-strike call, a 10-cent contract that traded about 16,000 times and needs long bonds to recover all their ground lost since Sep. 22.
- One aggressive buyer at 10:01 ET spent at least $250,000 on 25,000 of the 82-strike calls expiring Oct. 16 and Oct. 30 plus 5,000 of the 80-strike calls expiring Oct. 30, shortly before a 10-year note auction sparked a strong bond rally.
- The bullish TLT flows followed unusually optimistic trading in the rate-sensitive utility sector, where someone sold $1 million of XLU puts on Friday and utilities have since risen about 3%.
- The 30-year bond auction at 1 p.m. ET was the next key test for the rates market.
Quotes
“Tens had a bullet bid today – auction demand has been very strong”
“Demand is strong. It was `fill my market order at market prices because I want them.”
“Yields may be topping out”
“But I would rather own stocks. If yields fall, stocks will outperform bonds.”