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Cryptopolitan 2025-12-22 21:07:13

Traders dumped $80M into March Treasury options, betting 10-year yields drop to 4% soon

Options trading surged across the U.S. Treasury market as traders positioned for a bond rally that could pull the 10‑year yield back to 4% in the coming weeks, a level that has not appeared since late November, according to data from the CME. Earlier this month, the 10‑year Treasury peaked near 4.20% before moving within a tight range. Investors spent recent sessions weighing incoming economic readings and reviewing comments from Federal Reserve officials during each of the three rate cuts that have happened this year. Traders pile into March contracts as open interest jumps CME figures released Monday showed aggressive buying in a single March options contract tied to the 10‑year Treasury. The total premium paid on that position reached about $80 million, a size rarely seen for one structure. Open interest climbed to 171,153 contracts, reflecting a 300% jump in one week. The rise showed new positions entering the market rather than existing trades being rolled forward. The wager landed even as yields moved higher on the day. Treasury yields finished Monday around two basis points higher across most maturities, pushing the 10‑year yield to about 4.16%. That move followed a $69 billion auction of two‑year notes, which drew solid demand and cleared without disruption. The pricing confirmed continued appetite for short‑dated U.S. government debt despite the rise in yields. Another trade surfaced during the same session. Traders paid a $28 million premium for a separate March options position aimed at a 10‑year yield near 4.05%. The structure sat close to the larger bet and shared the same expiration window. Both trades are set to expire on Feb. 20, after the Federal Reserve’s January policy meeting, allowing traders to express views on changes in rate expectations tied to that decision. Yields rise into auctions as volatility stays low Meanwhile, the 10‑year US Treasury yield , the benchmark for government borrowing, rose 2 basis points to 4.171% by the closing bell on Monday. The 2‑year yield surged by more than 2 basis points to 3.511%, and the 30‑year bond moved up more than one basis point to 4.843%, according to data from CNBC. For the uninitiated, a basis point equals 0.01%, and yields move in the opposite direction of prices. The 1‑month Treasury stood at 3.632%, the 3‑month yield printed 3.62%, the 6‑month yield has settled at 3.608%, the 1‑year closed near 3.527%, while the 2‑year finished around 3.507%, and the 30‑year held close to 4.838% by the end of the session. Market volatility remained muted, with the Bank of America MOVE index dropping to its lowest level in more than four years, signaling calm conditions across the Treasury market. Meanwhile, the Treasury has scheduled a $69 billion two‑year note auction on Monday, a $70 billion five‑year note sale on Tuesday, and another $44 billion seven‑year note auction for Wednesday. Get up to $30,050 in trading rewards when you join Bybit today

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