Bet on 75-Basis-Point ECB Cut Next Month Eyes Tenfold Payout
- Wager uses options to target ECB cutting deposit rate to 2.5%
- Bet seeks payout of 10 times the €625,000 premium paid
The European Central Bank headquarters.
Photographer: Alex Kraus/BloombergThis article is for subscribers only.
Bold bets on the European Central Bank’s next moves on interest rates are making waves in the options market.
One trader paid €625,000 ($661,000) for options that will pay out tenfold in two scenarios, according to people familiar with the transaction. The first is if the ECB reduces rates by a hefty 75 basis points in December. The second is if the central bank cuts by half a point and indicates another move lower in January.