Traders Ramp Up Bets on a Hawkish Fed Surprise at Jackson Hole
- Option strategy looks for expectations to shift to seven hikes
- Downside bet now third largest single Eurodollar option
Photographer: Price Chambers/Bloomberg
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A large option bet on quicker rate-hikes by the Federal Reserve got bigger this week, even as officials pushed back against hawkish expectations.
The wager -- carrying a notional value of $40 billion -- is focused on a possible surprise at the annual August symposium in Jackson Hole, which has been used in the past by central bankers to signal changes in monetary policy. The positions are now the third-biggest of any Eurodollar options.