Yield-Based Option(redirected from Yield Based Option)
An option where the underlying asset is a debt security. The strike price of a yield-based option is expressed as a yield. The payoff on such an option is the difference between the "strike yield" and the actual yield on the underlying debt security on or before (depending on the type of option) the expiration date. Yield-based options are settled in cash. See also: Cash settlement.
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