Todd Gordon's TLT ETF Options Trade

Todd Gordon of TradingAnalysis.com shared with the viewers of CNBC's "Trading Nation" his options trading idea in iShares Barclays 20+ Yr Treas.Bond (ETF) TLT.

He analysed iShares Russell 2000 Index (ETF) IWM and he concluded it has been trading flat since December. He explained it's usually a bad sign when the small-cap stocks don't confirm the move in the large-cap stocks. Gordon is concerned he won't be able the choose a correct timing of a break down in iShares Russell 2000 Index (ETF), so he decided to trade iShares Barclays 20+ Yr Treas.Bond (ETF) instead, because he sees it as a risk aversion vehicle that has already started to move higher.

Gordon wants to buy the June 126/128 call spread in iShares Barclays 20+ Yr Treas.Bond (ETF) for $0.50. The trade breaks even at $126.50 or 0.78 percent higher. It can maximally make a profit of $1.50, if the stock moves to $128 or higher at the June expiration.