The TLT Treasury exchange-traded fund slipped again yesterday, and a big put spread is positioning for further declines.
The iShares Barclays 20+ Year Treasury Bond ETF was down fractionally on the day, closing at $125.49. It was at an all-time high of $132.22 three weeks ago, and there is support for the fund around $124.50 that goes back to May.
The big trade was a diagonal spread, which entails buying and selling options at different expiration months. A trader sold 15,000 August 127 puts for the bid price of $1.13 against open interest of 35,719 while buying 20,000 September 125 puts for the ask price of $1.90. The open interest at that strike was just 3,249.
This could be a straightforward bearish bet or a hedge against a long position in the fund, though the increase in the size of the position--which also makes this a ratio spread --may suggest the former.
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