Traders work at the New York Stock Exchange on Sept. 30, 2026.
NYSE
Calling a bottom in the nonstop U.S. Treasury bond sell-off might seem crazy, but a handful of options traders look increasingly willing to do it.
Trading in the iShares 20+ Year Treasury Bond ETF (TLT) Wednesday was very call-heavy on volume that was 50% above the 30-day average, according to data compiled from Cboe LiveVol and SpotGamma. Traders bought almost 370,000 calls versus under 100,000 puts in TLT, and sold more puts than they bought.
Nine of the top 10 traded contracts in the ETF were calls, and while there was some call-selling, volume and premium was on the side of bulls, suggesting traders think the risk-reward of betting on higher yields isn’t great. A rally in the TLT would mean a decline in rates.
What’s more is the most popular trade in the monthly Oct. 30 expiry for TLT was buying the 82-strike call. That’s a 10-cent contract that traded about 16,000 times today, and needs long bonds to recover all their lost ground since Sep. 22 – the particularly nasty stretch of this year’s sell-off that saw TLT drop 6% and the 30-year yield passing 5.6%.
Most of the buying came from one aggressive buyer at 10:01 ET, who spent at least $250,000 buying 25,00 of the 82-strike calls expiring Oct. 16 and 30th, and 5,000 of the 80-strike calls expiring Oct. 30. The trades weren’t massive by dollar amount, but they marked the biggest purchase of any contracts for month-end expiry, and came shortly before an auction of 10-year notes that sparked a strong rally in bonds.
iShares 20+ Year Treasury Bond ETF, (TLT)
“Tens had a bullet bid today – auction demand has been very strong,” Jim Perry, founder and chief investment officer of Perry International Capital Partners, said in a text. “Demand is strong. It was `fill my market order at market prices because I want them.'”
Another key test arrives today with the auction of 30-year bonds at 1 p.m. ET.
The flows in TLT options Wednesday followed onto some unusually optimistic trading in the rate-sensitive utility sector recently. On Friday, instead of the persistent put-buying that had marked options flows in the XLU ETF for the past month, trading was dominated by someone who sold $1 million of puts betting the group’s selloff will taper or turn around.
Utilities are up about 3% since then, and while call-selling was prominent throughout XLU trading Wednesday, there was very little put-buying. Among the $12 million in premium exchanged on the ETF, just $1 million was tied to calls.
“Yields may be topping out,” added Perry. “But I would rather own stocks. If yields fall, stocks will outperform bonds.”
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