# DV01 > DV01 measures how many dollars a bond or portfolio gains or loses for a one basis point change in yield. Learn the formula, hedge ratios and how traders use it. Source: https://learn.tradelabsai.com/bonds-credit/dv01/ Track: Bonds, Rates and Credit · Level: Advanced · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "DV01", https://learn.tradelabsai.com/bonds-credit/dv01/ DV01, the dollar value of a basis point (also called PV01 or PVBP), measures how much a bond or portfolio's value changes, in currency terms, when yields move by one basis point (0.01 percentage points). Duration gives price sensitivity in percent; DV01 gives it in dollars. Traders use DV01 to size positions, set risk limits, build hedges and construct yield curve trades that are neutral to parallel moves in rates. ## The formula ``` DV01 ≈ modified duration × market value × 0.0001 ``` Because DV01 is quoted for a one basis point move, a rise in yields of 10 basis points causes a change of roughly 10 × DV01. **Example: DV01 of a bond position** You hold $10 million face value of a 10 year Treasury note trading at par, with modified duration 8.2. DV01 ≈ 8.2 × $10,000,000 × 0.0001 = $8,200. If yields rise 15 basis points, the position loses about 15 × $8,200 = $123,000. If yields fall 15 basis points, it gains about the same. ## DV01 of common instruments | Instrument | Approximate DV01 | |---|---| | $1 million 2 year Treasury | About $190 | | $1 million 10 year Treasury | About $820 | | $1 million 30 year Treasury | About $1,700 | | One 10 year Treasury note future (ZN) | About $65 to $75 (depends on cheapest to deliver) | | $10 million 10 year interest rate swap | About $8,500 (similar to a 10 year bond) | Figures vary with yields, coupons and contract details. ## Hedging with DV01 To hedge one position with another, match their DV01s: ``` hedge ratio = DV01 of position / DV01 of hedge instrument ``` **Example: Hedging with Treasury futures** A fund holds corporate bonds with total DV01 of $50,000. It wants to remove interest rate risk (keeping credit spread exposure). If one 10 year Treasury future has a DV01 of $70, the fund sells 50,000 / 70 ≈ 714 contracts. If Treasury yields rise 20 basis points, the bonds lose about $1,000,000 from the rate move, and the short futures gain about $1,000,000. See [Treasury Bills, Notes and Bonds](https://learn.tradelabsai.com/bonds-credit/treasury-bills-notes-and-bonds/). ## DV01 neutral curve trades Yield curve trades are usually weighted so that each leg has the same DV01. This removes exposure to parallel shifts and isolates the change in the curve's shape. **Example: A 2s10s steepener** A trader expects the curve to steepen: 10 year yields rising relative to 2 year yields. A $10 million 10 year position has DV01 of about $8,200; a 2 year note has about $190 per $1 million. To match DV01, the trader buys about $43 million of 2 year notes (DV01 about $8,200) and sells $10 million of 10 year notes. If both yields rise by 10 basis points, the legs offset. If the 10 year yield rises 10 basis points more than the 2 year, the trade makes about $82,000. See [Yield Curve Trades: Steepeners, Flatteners and Butterflies](https://learn.tradelabsai.com/bonds-credit/yield-curve-trades/). ## Key rate DV01 A portfolio's total DV01 assumes all yields move together. Key rate DV01 (or bucketed DV01) breaks the sensitivity down by maturity point (2 years, 5 years, 10 years, 30 years), showing exposure to curve twists. Risk managers use it to spot hidden curve bets. See [Yield Curves](https://learn.tradelabsai.com/bonds-credit/yield-curves/). ## Credit DV01 (CS01) For corporate bonds and credit default swaps, CS01 measures the change in value for a one basis point change in credit spreads, separate from interest rate DV01. See [Credit Spreads](https://learn.tradelabsai.com/bonds-credit/credit-spreads/) and [Credit Default Swaps (CDS)](https://learn.tradelabsai.com/bonds-credit/credit-default-swaps/). ## Why traders prefer DV01 - **Comparable:** dollar risk can be added across positions. - **Actionable:** hedge sizes come directly from DV01 ratios. - **Limit friendly:** desks set limits in DV01, such as "no more than $50,000 per basis point". ## Limits DV01 is a linear measure. For large moves, convexity changes DV01 itself, and hedges need rebalancing. See [Convexity](https://learn.tradelabsai.com/bonds-credit/convexity/). ## Frequently asked questions ### What is DV01? The dollar value of a one basis point change in yield: how much a bond or portfolio gains or loses when yields move by 0.01 percentage points. ### How do you calculate DV01? Multiply modified duration by market value and by 0.0001. ### How is DV01 used in hedging? By dividing the DV01 of the position by the DV01 of the hedge instrument to find how many units of the hedge are needed. Next, learn how yields vary by maturity in [Yield Curves](https://learn.tradelabsai.com/bonds-credit/yield-curves/). ## Continue learning - Next lesson: [Yield Curves](https://learn.tradelabsai.com/bonds-credit/yield-curves/) - Previous lesson: [Convexity](https://learn.tradelabsai.com/bonds-credit/convexity/) - Related: [Convexity](https://learn.tradelabsai.com/bonds-credit/convexity/): Convexity measures how a bond's duration changes as yields move, refining price estimates for big moves. Learn the formula, positive and negative convexity and uses. - Related: [Duration](https://learn.tradelabsai.com/bonds-credit/duration/): Duration measures how sensitive a bond's price is to interest rate changes. Learn Macaulay, modified and effective duration, how to calculate them and their uses. - Related: [Yield Curve Trades: Steepeners, Flatteners and Butterflies](https://learn.tradelabsai.com/bonds-credit/yield-curve-trades/): Yield curve trades bet on changes in the curve's shape rather than its level. Learn steepeners, flatteners and butterflies, DV01 weighting, carry and roll down. - Related: [Interest Rate Swaps](https://learn.tradelabsai.com/bonds-credit/interest-rate-swaps/): An interest rate swap exchanges fixed interest payments for floating ones on a notional amount. Learn how swaps work, SOFR, swap rates, valuation, uses and risks. - Related: [Managing Portfolio Greeks](https://learn.tradelabsai.com/options/managing-portfolio-greeks/): Learn to add up delta, gamma, theta and vega across many option positions, set limits, run scenarios and adjust a book so its risks match your intentions.