What Is a Bond Option?
The objects of bond option transactions are mostly government bonds and bonds issued by government agencies. Treasury options are the right, but not the obligation, for a buyer to buy or sell a specific amount of a medium- or long-term bond. If the option is exercised, the seller of the option is obliged to deliver specific securities-physical delivery. Most OTC transactions are settled in cash based on the difference between the option exercise price and the spot market price on the settlement date.
Bond options
- This entry lacks an information bar and an overview map . Supplementing related content makes the entry more complete and can be upgraded quickly. Come on!
- The objects of bond option transactions are mostly government bonds and bonds issued by government agencies. Treasury options are the right, but not the obligation, for a buyer to buy or sell a specific number of medium and long-term bonds at a predetermined price. If the option is exercised, the seller of the option is obliged to deliver specific securities-physical delivery. Most OTC transactions are settled in cash based on the difference between the option exercise price and the spot market price on the settlement date.