Traders Target 1,000% Return With Bet on Deeper BOE Rate Cuts

Some traders have placed wagers in the UK options market that could net a more than 1,000% return if the Bank of England ignores inflation at an eighteen month high and delivers more cuts this year than rates pricing suggests.

The bets were initiated on Thursday by purchasing option strategies tied to the Sterling Overnight Index Average rate — a proxy for policy rates. They’ll pay out out almost £20 million ($26.8 million) on initial outlays of around £1.5 million if the benchmark rate falls to 3.5% this year — a quarter point more than money markets are currently implying.