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Traders Boost Treasury Options Bets on 10-Year Yield Reaching 4%

CME data shows a sharp rise in March 10-year Treasury options activity, with open interest tripling and $80 million in premiums paid as traders anticipate higher yields.

Summary

On Dec. 23, traders significantly increased purchases of March U.S. 10-year Treasury options, betting yields will rise to 4% in the coming weeks. CME data reported open interest soaring 300% to 171,153 contracts and $80 million in premiums paid, indicating heightened speculation on rising yields.

Terms & Concepts
  • Treasury options: Derivative contracts giving the right, but not the obligation, to buy or sell U.S. Treasury securities at a predetermined price.
  • CME: Chicago Mercantile Exchange, a major U.S. derivatives exchange offering futures and options across asset classes.
  • Open interest: The total number of outstanding derivative contracts that have not been settled or closed.