Protection against interest rate hikes

K

KohPhiPhi

As we know, when you invest in stocks/ETFs, you can buy a leveraged protection from unexpected left tail risks by buying OTM puts on the underlying, or calls on VIX, or other similar option-based strategies. That is easy.

Well, I am currently invested in certain credit-based instruments subject to left tail risks should the Fed end up hiking rates beyond what the market has already priced in. I am therefore looking for an option-based position to hedge the risk off. What would be the most optimal vehicle to place such leveraged hedge?

Thanks in advance!
 
When I was invested in the mREITs (NLY, AGNC, etc.) years ago I used TLT OTM puts. It worked okay but when the credit conditions deteriorated in 2014 I sold the mREITs. Probably best to match maturities with a proxy and buy OTM puts.

You may benefit from the ORATS people since they have historical testing for options. I think one of the reps is usually around here occasionally.
 
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