Treasury Market Sees $14 Million Option Betting on 10-Year Yield Above 5%

On September 10, 2026, a large options trade appeared in the US Treasury market, positioned for the 10-year US Treasury yield to rise above 5%. The trade paid a premium of about $14 million. Under the option structure, the trade reaches breakeven if the 10-year Treasury yield rises to about 5.1%; if it rises further to 5.2%, the potential gain would expand to about $15 million. The 10-year US Treasury yield last touched 5.2% in 2007.

On September 10, 2026, the 10-year US Treasury yield stood at 4.94%, close to its 2023 peak of slightly above 5%; the 30-year US Treasury yield rose to 5.35%, the highest since 2007. The Treasury selloff continued. Before the large options trade came to light, a wave of hedging activity had already emerged, intensifying selling pressure in the bond market.

Convexity hedging is typically triggered by institutions holding mortgage-related securities. When a rapid rise in yields extends duration, such institutions need to sell Treasuries or interest rate derivatives to realign their exposure, creating additional selling pressure.