Are yield-based options available on corporate bonds?

Yield-based options are not available on corporate bonds primarily because they are specifically designed for Treasury securities. These options allow investors to speculate on or hedge against changes in the yield of U.S. Treasury securities rather than corporate bonds.

The market for yield-based options is structured around the characteristics of Treasury securities, which are backed by the full faith and credit of the U.S. government. This creates a stable framework for the options. Corporate bonds, on the other hand, have different risk profiles, credit ratings, and yield characteristics, making them unsuitable for yield-based options in the same way.

The distinctions between the types of securities also clarify that options tied to yield movements are typically more relevant for government securities, thus excluding both corporate bonds and municipal bonds from this category. Therefore, the availability of yield-based options is strictly limited to certain types of government issues.