Shares of the Proshares Ultrashort 20+ Year Treasury Fund (TBT) are trading higher on the session by 2.34%, at $16.17, as bonds continue to come in.
With treasuries (as measured by the TLT) dropping 4.5% in just over 7 trading days, as well as nearing the 200-day moving average, some trades are betting that the slide could be over.
Shortly after the opening bell one trader sold the TBT September $16.50 weekly call 2,367 times, on the bid, for $0.12. Open interest on the strike was only 683 contracts, which indicates fresh positioning.
A few minutes later, the September $17.00 call was sold 1,500 times, on the bid, for $0.12. Volume was below open interest.
To round out the morning?s action, The September $16.00 weekly call was sold 923 times, on the bid, for $0.34. Volume was also below open interest.
So, what does all this mean? Selling calls on a double-inverse ETF like the TBT means that traders do not see it going much higher than current levels. This translates to the ETF?s underlying not going much lower from here. Thus, treasuries and the TLT could be bottomed on a short-term basis.
Near-term implied and historical volatility on the TBT is running at 30% and 26%, respectively. ? ??
The Proshares Ultrashort 20+ Year Treasury Fund seeks daily investment results before fees and expenses that correspond to twice the inverse (-2x) of the daily performance of the index.