Options traders are snapping up calls in the TBT (TBT - commentary - Cramer's Take) exchange traded fund, which has been rising steadily since the end of the year.
The TBT, which seeks investment results that correspond to twice the inverse daily performance of the Lehman 20+ Year U.S. Treasury Index, saw some 16,000 calls traded today versus 5,700 puts. (Remember, because this ETF trades inversely, the calls go up as the bonds in the TBT drop.)
Both the January 41 and 42 call volumes are 6 to 9 times the open interest at either strike, according to optionMONSTER's tracking systems. Average daily turnover of calls in the month of December was a mere 700 contracts per day, so today's action is 24 times heavier than normal.
Since Dec. 31 the TBT has rallied sharply, running from just below $36 to as high as $42 today.
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Jon "DRJ" Najarian is a professional investor, noted media analyst and speaker, and cofounder of optionMonster. Following a brief stint as a Chicago Bears linebacker, Jon launched his financial career at the Chicago Board Options Exchange in 1981, trading in the pits for some 25 years. In 1989 he founded Mercury Trading, running the company for 15 years until 2004, when he sold his floor-trading operations to Citadel, one of the world's largest hedge funds. More recently, Jon -- often known after his CBOE floor call letters "DRJ" -- has developed and patented trading applications used to identify unusual activity in stock, options and futures markets, notably the Heat Seeker program, which uncovers extraordinary buying patterns from among the 180,000 quotes per second that stream from America's stock, options and futures exchanges. In addition to optionMonster.com, Jon's research and analysis is widely cited by leading financial media including The Wall Street Journal, Barron's, Reuters, Bloomberg, Dow Jones, Fox News Channel, CBS Radio and CNBC. Jon is a CNBC contributor, hosts a CBS Radio show, and webcasts twice daily on CBOE-TV.
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