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Credit options are attracting greater attention, fuelled by hedge funds seeking additional sources of returns. Traders view the new interest as a step towards establishing credit volatility as an asset class, as Rachel Wolcott reports

The search for yield in the credit markets continues to motivate investors to explore new structures and trading strategies, and credit options are the latest product to benefit from this trend. Hedge funds in particular have taken up the product, as have proprietary credit traders and real-money managers, albeit to a lesser extent. Ultimately, though, traders believe it is essential for more real-money investors to use credit options for the product to really take off and for credit volatility