Dan Nathan's 20-Year Treasury Bond Trade

Dan Nathan spoke on CNBC's Options Action about an options strategy in iShares Barclays 20+ Yr Treas.Bond (ETF) TLT. He believes that bonds could trade higher and he wants to use a risk reversal to make a bullish bet.

Nathan wants to sell the February 116 put for $1.75 and buy the February 127 call for $1.75. The trade would make money above $127 or approximately 4 percent higher and it would lose money if iShares Barclays 20+ Yr Treas.Bond (ETF) trades below $116 at the February expiration. The stock has to drop 5 percent for the trade to lose money.