TLT Call Spread Buyers Gain 12.8% on $188K Trade as Stock Rises—What Do Market Signals Reveal?
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Summary: Large Volume Call Spread Earns Quick Gain Amid 1.9% Stock Move
On June 4, a substantial call spread traded in the iShares 20+ Year Treasury Bond ETF (TLT), moving 8,000 contracts between the 86 and 87 strike prices, set to expire on July 18, 2025. The spread went off at a volume-weighted average price (VWAP) of $0.47, with the buyer now showing a 12.8% gain as the market price for the spread reached $0.53. TLT shares rose $0.64 from the reference trade price of $85.98 to $86.61—accounting for much of this profit in a matter of hours.
Trade Breakdown: $188K to Potentially Make $212K
| Trade Detail | Value |
|---|---|
| Options Expiration | 18-Jul-25 |
| Strikes (Call Spread) | 86/87 |
| Contracts | 8,000 |
| Days to Expiry | 44 |
| VWAP Trade Price | $0.47 |
| Spread Market Price (12:25) | $0.53 |
| Buyer’s Gain (so far) | $0.06 (12.8%) |
| Total Spent (Buyer) | $188,000 |
| Potential Max Profit | $212,000 |
| Break-Even at Expiry | $86.47 |
| Max Profit at Expiry | $87+ |
For further analysis on this or similar trades, visit the Multi-Leg Trade Analyzer.
Buyers Are Betting TLT Finishes Over $87 by Expiry
The strategic goal is clear: this trade profits most if TLT closes above $87 at expiration. With $188,000 risked, the max payout could reach $212,000 if TLT exceeds that strike. A move above the break-even price of $86.47 is needed for any profit at all, suggesting buyers expect continued momentum in the bond ETF—possibly due to macro expectations or interest rate forecasts.
Technical Analysis: Recent Bounce, But Medium-Term Weakness Persists
| Statistic | Value |
|---|---|
| Latest Price | $86.61 |
| Change Today | +1.60 (+1.88%) |
| Open-to-Close % | +0.9% |
| 52Wk Range | Low: $83.97 | High: $101.33 |
| % from 52Wk Low | +4.0% |
| % from 52Wk High | -14.8% |
| 20-Day Moving Avg | $85.85 |
| 50-Day Moving Avg | $87.68 |
| 250-Day Moving Avg | $91.70 |
| Current vs. 20 DMA | +0.9% |
| Current vs. 50 DMA | -1.2% |
| Current vs. 250 DMA | -5.6% |
Despite today’s solid 1.88% jump, TLT still trades below its medium- and long-term moving averages. This suggests some near-term upside momentum, but a larger downtrend persists since the 52-week high in September 2024. Compared to the S&P 500 (SPY), TLT has underperformed over one-year and three-month spans, although it did outperform SPY over the past two weeks, perhaps due to renewed demand for treasuries.
Performance vs. SPY (Various Periods)
| Duration | TLT Return | SPY Return |
|---|---|---|
| Today | +1.9% | 0.0% |
| 2 Weeks | +1.8% | +0.6% |
| 1 Month | -0.9% | +5.2% |
| 3 Months | -5.4% | +2.4% |
| 6 Months | -4.9% | -0.7% |
| 1 Year | -1.3% | +14.3% |
| YTD | +1.0% | +2.0% |
| 3 Years | -16.5% | +50.2% |
| 5 Years | -36.5% | +101.2% |
Skew Indicator Signals Cautious Market—Option Skew at 12% (Bearish)
Market Chameleon’s proprietary option skew rank for TLT sits at 12%—firmly in bearish territory compared to its last 52 weeks. This means that, based on option pricing, traders are still assigning a higher risk premium to downside moves, even as TLT enjoys a short-term rally. The skew’s posture implies skepticism about the durability of recent gains, possibly reflecting continued macroeconomic uncertainty.
Key Takeaways: Cautious Optimism in TLT Options Positioning
- Big Bet, Tight Window: The 8,000-lot July call spread is up 12.8% in a few hours, as TLT shares advanced by nearly 2%.
- Short-Term Strength, Longer-Term Hurdles: TLT broke above its 20-day average, but is still trading well below its 50- and 250-day moving averages.
- Bearish Option Skew: The 12% skew rank reveals traders are hedging against downside, despite short-term bullishness in price action.
Traders eyeing TLT’s next moves will want to monitor technical resistance near $87, market sentiment, and shifts in implied volatility. If you want to analyze similar strategies, check out the multi-leg option trade screener for real-time updates on large and unusual trades.
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