Traders Bet Big: $80M March Treasury Options Positioned for 10-Year Yields to Plunge to 4%
Wall Street just placed a massive, concentrated bet against rising rates.
A Whale-Sized Wager
In a single, decisive move, sophisticated traders funneled a staggering $80 million into options contracts tied to March Treasury futures. The target? A swift and sharp reversal in the benchmark 10-year yield, pushing it down to the psychologically significant 4% level. This isn't a hedge; it's a conviction play betting the Federal Reserve's next pivot comes sooner than the official dot plots suggest.
The Crypto Angle: A Rising Tide
While this trade focuses on traditional debt markets, its implications ripple directly into digital assets. Lower long-term yields weaken the dollar's appeal and reduce the opportunity cost of holding non-yielding assets like Bitcoin. For crypto bulls, a drop to 4% isn't just a bond market story—it's potential rocket fuel for risk appetite, potentially unlocking the next leg of the institutional adoption narrative. After all, when traditional finance starts betting against itself, smart money looks for the exit ramp to alternative systems.
The trade screams one thing: a growing faction believes the current rate regime is unsustainable. Whether it's foresight or folly, that $80 million gamble highlights the extreme positioning now defining markets. Just another day where derivatives traders attempt to front-run the world's most powerful central bank—what could possibly go wrong?
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.
Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.
