When a bond is traded above par value, what is that situation called?

When a bond is traded above par value, that situation is referred to as premium trading. This occurs because the bond's market price exceeds its face value, typically due to the bond offering a higher coupon rate than the current interest rates available in the market. Investors are willing to pay more than the par value to secure the higher interest payments offered by the bond.

In circumstances where the bond's coupon rate is attractive relative to current market rates, demand for those bonds increases, pushing their prices up above par. This is a key concept in bond trading, as understanding the relationship between a bond's price, its par value, and prevailing interest rates is essential for making informed investment decisions.

The other terms, while related to various trading scenarios, do not specifically describe the situation of a bond being sold above its par value. Discount trading refers to bonds sold below par, market trading is a general term for bonds being traded in a market environment, and future trading relates to contracts for promises to buy or sell an asset at a future date, rather than the specific pricing dynamics of bonds.