Options traders aren’t wasting time getting in on those bets.
One example seen in the market this week: A five-part eurodollar options trade which at its core is a wager that the price of the December eurodollar futures contract will extend declines as the market factors in a greater chance of a hike at year-end.
It’s a gamble that policy makers will stick to the plan they’ve been signaling all year. And with their track record of raising rates in March and June, and the promised balance-sheet reduction seemingly coming soon, at least some traders are starting to take the Fed at its word.
This article was provided by Bloomberg News.