Options traders bet that the Federal Reserve will hold steady throughout 2026, with March and June contracts becoming the key focus of the strategy.

【BlockBeats】Recently, the options market has sent an interesting signal—more and more traders are adjusting their expectations for a rate cut by the Federal Reserve. The shorts who were betting on a rate cut in 2026 are turning around, now betting that the Fed will keep interest rates unchanged throughout the year.

This shift began last Friday. At that time, the US employment data released gave the market a shock—unemployment unexpectedly fell, almost eliminating the possibility of a rate cut by the Fed this month. Following this, traders have been pushing back their expectations for when the rate cuts will occur in the coming months.

TJM Institutional Services’ interest rate strategist David Robin analyzed: “Based on current data, the probability that the Federal Reserve will hold steady at least until March has clearly increased. With each meeting, the likelihood of stable rates rises.” The flow of options related to the secured overnight financing rate (a direct indicator of short-term benchmark interest rates) also reveals a more hawkish stance.

What exactly are traders positioning themselves for? The newly established options positions are mainly concentrated in March and June contracts, with a very direct purpose—hedging against the risk of further delays in the Fed’s rate cut actions. As for longer-term positions, they are betting that the Fed will not move at all throughout 2026.

Interestingly, whether traders truly believe the Fed will stay put or not, the cost of establishing such positions is very low. Robin pointed out that from a risk management perspective, cautious institutions would want to hold such protective positions—like buying cheap insurance—to leave room for possible policy changes.