According to Bloomberg, U.S. government debt is becoming increasingly dangerous to options traders who are pushing up the cost to protect against sudden losses.
The publication explains:
While the prospect the Fed will keep its $85 billion of monthly bond purchases into 2014 caused swings in 10-year Treasury yields to diminish and encouraged bullish options traders to bet on lower rates, the relative calm is obscuring the danger that investors may get blindsided by a pullback. Some speculators are hedging their bets that yields are poised to eclipse 3 percent. Reports on jobs, services and manufacturing last week all showed U.S. companies persevered through the partial government shutdown.