For practitioners, does the concept of implied volatility also apply to (European) Treasury Options (whose underlying is Treasury Futures contracts)?

For the standard individual stock vanilla European call/puts there isn't much ambiguity about IV because BS is by far the most commonly accepted model and in BS the only unknown is (kind of) the vol and so it can be backed out without effort. In fact this also kind of applies to any options evaluated under the BS log-normal world, e.g. stock/commodity futures options which are readily evaluatable with Black '76, say.

However, the case of TF options seems to be much more complicated. Firstly there is no very commonly agreed upon model for interest rates as there is BS for equity/commodity. Secondly, in contrast with BS, even the relatively well-known and simple interest rate models like Vasicek or Hull White usually entail non-observable parameters. All these difficulties seem to make IV less straightforward for TF options than for their equity/commodity counterparts.

So, how do practitioners go about figuring out IV, or engineering similar concepts for TF options?


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