Options traders continue to position for higher yields and lower bond prices with ETFs that follow U.S. Treasuries.
Treasury bears have surfaced again this week to snap up calls in ProShares UltraShort 20+ Year Treasury Bond (NYSEArca: TBT), says Paul Weisbruch, head of ETF/options sales and trading at Street One Financial. [The Contrarian: Treasury ETFs]
“Likewise, good sized put buyers were also present in iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT), and these trades have been enacted continually in the options markets for months, with bearish speculators on the long bond appearing rather frequently especially in the past two weeks,” Weisbruch wrote in a strategy note. [Finally Time to Short Treasuries with ETFs?]
TLT fell sharply earlier this month but has rebounded somewhat at the 200-day simple moving average. [ETF Chart of the Day: Treasury Bonds]
Elsewhere in options markets, traders are using ETFs to position for lower volatility in the stock market, and also higher gold prices.
“Options volumes in iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) reached new heights [Monday], with nearly 500,000 put contracts trading and 241k calls. We have noted in the past week or so the presence of put buyers in VXX, and it is likely that some of the activity yesterday is closing activity with options players cashing in on in the money puts as the ETN sunk further to recent lows yesterday on extremely heavy volume,” said Weisbruch at Street One. [Volatility ETFs Thumped on VIX Multiyear Low, Contango]
Separately, bullish call buyers have been active in SPDR Gold Shares (NYSEArca: GLD). The bullion ETF is higher this week following dovish comments from Federal Reserve Chairman Ben Bernanke. [Gold ETFs Rise]
SPDR Gold Shares
Full disclosure: Tom Lydon’s clients own GLD.