A Rare Options Trade On Rising Rates You Don’t Want To Miss

A Rare Options Trade On Rising Rates You Don't Want To Miss
This story originally appeared on Zacks

The Federal Reserve is accelerating its monetary tightening policies with inflation officially no longer ‘transitory,’ following Fed Chair Jerome Powell’s retirement of the term in regards to inflation in his Congressional testimony the first week of December. Yet, the US 10-Year yield is being held under 1.5%, when it should be trading much closer to 2%.

A Rare Options Trade On Rising Rates You Don't Want To Miss – Zacks

This is almost certainly due to a supply and demand imbalance in Treasuries as global investors rush to the safety of this “risk-free” bond as equities look shaky.

As the Fed pares back its $80 billion in monthly US Treasury purchases (making up roughly 50% of this market), a rare option trade with massive upside potential is manifesting itself. I’m looking at a 6-month put option trade that is ripe for the picking in iShares 7-10 Year T-Bond…

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