Options contract based on an underlying debt security. Options, unlike futures, give buyers the right, but not the obligation, to buy the underlying bond at a fixed price before a specific date. Option sellers promise to sell the bonds at a set price anytime until the contract expires (American convention) or on a specified date (European convention). In return for granting this right, the option buyer pays a premium to the option seller. Yield-based calls become more valuable as yields rise, and puts become more valuable as yields decline.