US Option Market Bets Against Fed Rate Cuts in 2025

The US options market is signaling growing skepticism about the Federal Reserve’s anticipated rate cuts for 2025. A strike price of 95.6875, lower than the current SOFR futures price, suggests traders are betting against the three quarter-point cuts still priced into futures markets. This isn’t a minor position—open interest exceeds 275,000 contracts and has surged since the Fed’s latest policy meeting.

Powell’s recent comment that current rates are ’appropriate for current economic conditions’ appears to have fueled this contrarian play. The trade only pays off if rate-cut expectations collapse entirely, pushing futures prices down to the strike level. This aggressive positioning reflects deepening doubts about monetary policy easing amid persistent inflation pressures.