Rising oil prices change expectations for interest rate cuts, a bet on a Federal Reserve option earns $10 million profit.

The sharp increase in oil prices this month and the downward adjustment in market expectations for the Fed's loose policy led to profits of 10 million dollars in an options trade for short-term interest rates. This bet was placed in January in the form of options related to the secured overnight financing rate, which is closely related to the Fed's policy trends. Position data covering Friday's trading released by the Chicago Mercantile Exchange Group on Monday showed that the selling pressure on this option at the end of last week matched the profit-taking behavior of this position. This bet existed even before the outbreak of war in the Middle East, indicating that the Fed's interest rate level in mid-2028 will be higher than the generally expected level in January. Last week, this bet turned a loss into a profit, as the conflict caused crude oil prices to rise to their highest level since 2022, triggering concerns about inflation and prompting traders to expect the Fed to maintain higher rates for longer.