been range-bound for the last few months between $115 and $125. The correlation between the S&P 500 and the TLT is -0.8, which is fairly typical as the two move in opposite directions.

optionMONSTER's systems show that 62,457 TLT options traded yesterday, almost twice the fund's daily average. Puts outpaced calls by more than 5 to 1, and most of the action was in one spread.

The first leg of the trade involved 10,000 February 117 puts that went for $2.18. The second part of position comprised 30,000 February 109 puts, 10,000 of them going for $0.32 and another 20,000 for $0.33, all at the same time.

It appears that the 109 puts were bought and the 117 puts sold in a backspread . The volume at both strikes was significantly more than open interest, so this is a new opening position.

The trade will make a small profit if the TLT remains above $117 and can make big gains if it falls sharply. But there was a large stock position as well, as 140,000 shares were bought for $118.60 a minute or so after the options changed hands, so this may be hedging some of the trade in such a way that the position can profit if the TLT rises or falls.

More From optionMONSTER

• Chevron reaches crossroads on chart
  
• Videocast: Huge put buying in VIX
  
• How one bull is sticking with Allstate