Fed Options Trade Earns $10 Million as Oil Upends Rate-Cut Views
Construction workers outside the Marriner S. Eccles Federal Reserve building in Washington.
Photographer: Pete Kiehart/BloombergThis month’s surge in oil prices and the market’s move to ratchet back expectations for Federal Reserve policy easing have generated a $10 million profit for one options bet in short-term interest rates.
The wager was placed in January in options linked to the Secured Overnight Financing Rate, which closely tracks the Fed’s path. Monday’s open interest data from CME Group Inc., which covers Friday’s trading, point to selling in the option at the end of last week as being consistent with the profitable liquidation of the position.