Yield-Based Options are a type of financial derivative that allow investors to gain exposure to changes in yield or income from an underlying asset, such as bonds, without actually owning the underlying asset.A yield-based option gives the holder the right, but not the obligation, to receive income in the form of a yield or coupon payment based on the underlying asset. The amount of income received is proportional to the yield of the underlying asset at the time the option is exercised.Yield-based options are typically used by investors to hedge against changes in interest rates or to gain exposure to changes in the yield of a particular asset without having to actually purchase the underlying asset. They can also be used for speculative purposes, such as betting on changes in interest rates or yield.It's important to note that yield-based options can be complex and carry significant risk, and as such, they may not be suitable for all investors. Before investing in yield-based options, it's crucial to fully understand the risks involved and to seek professional advice if necessary.
