Traders Pile Into Bond ETF Options as Treasury Yields Hit Two-Decade Highs

Traders are rushing into options tied to fixed-income ETFs at record pace, seeking to position portfolios as 10-year and 30-year Treasury yields reach their highest levels in two decades. Options volume on BlackRock's iShares 20+ Year Treasury Bond ETF (TLT) has surged, with the 20-day average hitting an all-time high for the fund. Open interest has more than doubled over the past year, approaching a record 13.55 million contracts set before last week's monthly expiration. Implied volatility and bearish put premiums on TLT have climbed to their highest since late March 2026. The trend extends to BlackRock's iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and iShares iBoxx $ High Yield Corporate Bond ETF (HYG). Steve Laipply, BlackRock's global co-head of iShares Fixed Income ETFs, said options on these exposures are gaining popularity because they provide access difficult to replicate efficiently in the underlying bond market. The surge reflects institutional and retail traders adopting ETF options to navigate the bond selloff, with equity-focused investors increasingly extending into rate products.