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Traders boost options on iShares Treasury ETF as yields surge
Options volume on BlackRock’s iShares 20 Year Treasury Bond ETF, TLT, is at the highest 20-day average ever for the exchange-traded fund, while open interest has more than doubled over the past year.
Traders are increasingly buying options tied to BlackRock fixed-income ETFs as Treasury yields rise to levels not seen in decades, according to LiveMint Markets, citing market data referenced in the report.
The outlet said options trading volume on BlackRock Inc.’s iShares 20 Year Treasury Bond ETF, ticker TLT, has hit a record pace, with the 20-day average at the highest level ever for the ETF. It also reported that open interest has more than doubled over the past year and is approaching the prior record of 13.55 million contracts set before monthly expiration last week.
LiveMint Markets attributed the options surge to wider swings in Treasuries as yields climb, which has lifted the cost of options for hedging and for taking bearish positions on higher yields. It added that implied volatility and the premium for bearish puts on TLT have risen to the highest since late March.
The report quoted Steve Laipply, BlackRock’s iShares Fixed Income ETF global co-head, saying the firm is seeing some of the highest trading volumes across Treasuries and both investment-grade and high-yield ETF markets.