The market for options on credit derivatives indexes has surgedmore than 40 percent in the past month to $98.8 billion asinvestors search farther afield for cheap hedges protecting againsta sell-off in the bond markets.

The contracts, which give investors the right but not theobligation to buy or sell indexes of credit-default swaps at acertain price, have doubled from $48.7 billion a year ago,Depository Trust & Clearing Corp. data show. That compares witha 17 percent drop in the amount covered by swaps benchmarks on U.S.and European investment-grade debt and a 4 percent decline for allcredit derivative products in the year through June 14.

Demand for options is a sign that the bond market might benearing an inflection point with Federal Reserve officials sayingthat the economy is strong enough for them to curtail measures thathave supported fixed-income prices.