Fixed income asset managers have many strategic alternatives available to them including the use of spot, futures and option markets in their pursuit of investment value (or "alpha") relative to market benchmarks. CME Group offers 2-year, 5-year and 10-year Treasury note futures; as well as "classic" and "Ultra" T-bond futures.

In addition to these highly successful futures contracts, CME Group offers options exercisable for these futures contracts. Similar to the underlying futures, these option contracts offer a high degree of liquidity, transparency, price discovery and are accessible through the CME Globex electronic trading platform.

This document represents the first in a two-part series of articles addressing the use of options on the part of fixed income asset managers. It is intended to provide a review of the fundamentals of CME Group Treasury options. Part two in this series, "Option Strategies for Fixed Income Asset Managers," reviews some of the ways in which options may be utilized to manage the risks associated.