Priced based options are used by investors to speculate on or to hedge against a change in Treasury securities’ prices. As interest rates change, the prices of Treasury securities will move in the opposite direction. Interest rates and bond prices are inversely related to each other. An investor who believes that interest rates are likely to rise would purchase price based puts or sell price based calls. Alternatively, an investor who believes that rates are likely to fall will purchase price based calls or sell price based puts. Priced based options on Treasury notes and bonds are based on a $100,000 par amount of a specific Treasury note or bond. Price based options on Treasury bills are based on $1,000,000 par value. Price based options, when exercised, will result in the delivery of the specific security.

Need Help Passing Your Series 4 Exam?



Premiums Price Based Options Treasury Notes And Bonds

Related Articles
  1. Investing

    The Importance Of U.S. Treasury Rates

    U.S. Treasury bond interest rates affect more than just bondholders! It impacts the day to day lives of all consumers.
  2. Investing

    Introduction to Treasury Securities

    Purchasing bonds that are backed by the full faith and credit of the U.S. government can provide steady guaranteed income and peace of mind. Knowing the characteristics of each type of treasury ...
  3. Investing

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  4. Investing

    Treasuries Rout May Deepen on Mortgage Hedging

    Fed rate hikes may spur mortage bond owners to sell Treasuries to reduce their exposure to rising rates
  5. Investing

    What is Treasury Stock?

    Treasury stock is a company’s own stock that it holds in its treasury for later use.
  6. Investing

    How To Short The U.S. Bond Market

    The U.S. bond market has enjoyed a strong bull run over the past few years as the Federal Reserve has lowered interest rates to historic low levels.
  7. Financial Advisor

    Top 4 Treasurys ETFs (SHY, IEI)

    Learn about the specifics of the top four U.S. Treasury ETFs and how investors can buy ETFs that invest in bonds along the yield curve.
  8. Investing

    TLT: iShares Barclays 20+ Year Treasury Bond ETF

    Learn about the iShares 20+ Year Treasury Bond ETF (TLT). TLT is a very liquid ETF with low costs that allow investors to gain exposure to treasuries.
  9. Financial Advisor

    Get This: Bonds Beat Stocks After All

    Data shows that long-term Treasury securities have actually outperformed the S&P 500 over the past 10 years.
  10. Investing

    Find The Right Bond At The Right Time

    Find out which bonds you should be investing in and when you should be buying them.
Frequently Asked Questions
  1. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlation formula to correlate ...
  2. What is the Difference Between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ...
  3. Where Did the Bull and Bear Market Get Their Names?

    The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual (bear and ...
  4. What's the difference between Google's GOOG and GOOGL stock tickers?

    Learn the difference between Google's GOOG and GOOGL ticker symbols. Splitting shares into classes prevents management from ...
Trading Center