Cheap SOFR options big buyers appear, aiming to hedge against the Fed rate hike premium.

After returning from the long weekend on May 26th, there was a significant flow of funds in the collateralized overnight financing rate options market. Of particular note was the buyers who made large purchases of cheap "December call option butterfly combinations" to place big bets on the upside. The core goal of this position is to target the expected decrease in the market's current pricing of the Federal Reserve's tightening measures by the end of this year.