Traders Pile Into 1.4 Million Treasury Options, Betting TLT Drops 11% on Higher Yields
Updated
Updated · CNBC · May 18
Traders Pile Into 1.4 Million Treasury Options, Betting TLT Drops 11% on Higher Yields
5 articles · Updated · CNBC · May 18
1.4 million TLT options changed hands Friday—more than triple the past month’s daily average—as 10-year and 30-year Treasury yields climbed to their highest in over a year.
380,000 puts were bought versus fewer than 240,000 calls, signaling a strong bias for lower long-bond prices and another rise in yields.
A $2 million trade in 15,000 June 75-strike puts bets the iShares 20+ Year Treasury Bond ETF falls another 11% by June 17, which would push the fund to its lowest level since its 2002 launch.
Another trader spent about $3 million on a January 2028 84-strike straddle, positioning for a large move either way if TLT drops below $74 or rises above $94.
The burst of options activity reflects mounting stress in global bond markets after last week’s CPI jump, crude oil above $100 and the end of Jerome Powell’s Fed chair tenure.
While traders bet millions on a bond market collapse, could this be a rare buying opportunity for long-term investors?
With Treasury yields soaring, are investors witnessing the end of the 40-year bond bull market?
As a new Fed chair takes over, can monetary policy still control inflation when fiscal debt is this high?
Surging Treasury Yields Drive TLT ETF to Multi-Year Lows Amid Inflation, Geopolitical Tensions, and Record Outflows
Overview
The report highlights how global bond markets are facing significant volatility, driven by a surge in options trading around the iShares 20+ Year Treasury Bond ETF (TLT). This turbulence is fueled by a recent spike in the Consumer Price Index, crude oil prices rising above $100 per barrel, and the end of Jerome Powell’s term as Federal Reserve chair. These factors have created an environment of uncertainty and speculation in fixed-income markets, leading to soaring US 30-year bond yields. As a result, outflows from the TLT ETF have increased, and its price is at risk of further declines, especially as technical patterns point to more downside ahead.