There is demand in the SOFR options market for bets on rate cuts by the Federal Reserve in December 2026 and March 2027.

On Monday, the SOFR options trading flow saw at least two notable bets, betting on the Federal Reserve's rate cut expectations being priced into futures contracts expiring in December 2026 and March 2027. In the options expiring in December 2026, the SFRZ6 96.50/97.00 call spread was bought at a price of 1 point for 20,000 contracts; the lower strike price corresponds to a 3.50% interest rate. For most trading days this year, the effective federal funds rate has been 3.63%, while the current price of the December futures contract corresponds to an interest rate of 4.005%. In the options expiring in March 2027, the SFRH7 98.50 call option was bought at a price of 1.25 points for 7,000 contracts, corresponding to a 1.5% interest rate, while the current futures rate is 4.10%.