Best Options Strategies for a Potential Fed Pivot

When stocks and bonds fall together, options become your friend

When stocks and bonds fall together, options become your friend. Look, the old rulebook said bonds cushion stocks. Then 2022 happened. The Bloomberg U.S. Aggregate Bond Index dropped about 13%, its worst year since inception in 1976, while stocks slid too. That single stat flips the usual diversification story on its head. The stock-bond correlation even turned positive for long stretches in 2022, so the classic 60/40 wasn’t a soft landing, it was a shared bruise. As I mentioned earlier, the cushion isn’t guaranteed when the Fed is moving the goalposts.

So, why bring this up in Q3 2025? Because a potential Fed pivot, toward cuts or an explicit pause, still matters a ton. Policy pivots reprice everything: rates, sectors, and volatility. And they do it fast. We’ve seen days this year where front-end yields lurch 10-20 basis points before lunch on a single data print, and the VIX occassionally pops to around 20 on macro headlines. You don’t need me to tell you that when the cost of money resets, equity duration, credit spreads, and factor leadership shuffle in a hurry. Honestly, I wasn’t sure about this either early in my career, I figured bonds would always bail me out. They don’t always. Not when policy is the shock absorber and the shock at the same time.

Here’s the thing: options let you separate conviction from sizing. They help you risk what you want, not what the market forces on you. That means you can say “I think rates fall” without going all-in on duration, or “I think volatility rises” without torching P&L if you’re early by, say, around 7% in price terms. You can define loss, shape payoff, and actually sleep through CPI night for once.

In 2022, the Bloomberg U.S. Aggregate Bond Index fell about 13%, worst since 1976, which means the 60/40 “automatic hedge” is not automatic when the Fed’s stance shifts.

What you’ll get here is practical, tradeable stuff that fits different pivot paths and your risk budget. No magic. Just structures you can price and manage.

• If the Fed cuts quickly: Tactically bullish rate bets and duration-friendly equity exposures using call spreads in bond proxies, calendars in rate-sensitive sectors, and put spreads as disaster insurance.
• If the Fed pauses longer: Income-focused overlays (covered calls, collars) to harvest time decay while volatility stays two-way, plus ratio put spreads for asymmetric shock protection.
• If inflation re-flares and cuts get pushed out: Tail hedges (put spreads on broad indices), diagonal spreads in cyclicals, and selective long vol (cheap calendars around key data) to catch repricings.
• If the path is choppy: Collars to bound risk, butterflies to target levels, and selective straddles/strangles when implied vol underprices known catalysts.

Actually, let me rephrase that: we’ll map the playbook to the pivot, not the other way around. You’ll see where defined-risk options can plug the hole that 60/40 didn’t, and how to size trades so you don’t recieve a margin call just because policy messaging changed between breakfast and the close. Anyway, we’ll keep it simple, real-world, and, importantly, budget-aware.

What a pivot really moves: rates, sectors, and vol (in plain English)

Look, when the Fed actually starts cutting, the first thing that usually moves is the front end of the curve. The 2-year tends to lead because it’s basically the market’s best guess at the policy path over the next handful of meetings. History’s a decent guide: on the day of the first cut in September 2007 (a 50 bp move), the 2-year Treasury yield dropped by roughly 49 bps. In the 2019 “mid-cycle adjustment,” the 2-year went from around 2.0-2.1% in late July to near 1.5-1.6% by October, call it about 50-70 bps. The long end, by contrast, often waits to see growth and inflation data before it really commits. You get that classic pattern where the curve eventually steepens as cuts filter through, but the initial impulse is front-end down, duration up.

So, translate that into stuff you can trade: duration-sensitive assets and rate-sensitives typically react first. Growth and other long-duration equities (think mega-cap tech, software, secular winners) usually catch a bid when discount rates fall. Homebuilders move with mortgage rates, Freddie Mac’s survey showed the 30-year fixed peaked near 7.8% in October 2023, and when we get relief, housing beta shows up fast. Earlier this year we had a few weeks where prints slipped back under 7%, and builders responded. Regionals and REITs are trickier, funding costs ease, cap rates adjust, but the first day or two after a cut is often risk-on for them as well, at least tactically. Defensives (staples, utilities, healthcare) tend to lag on those big green days; they catch up later if growth wobbles, but the initial “duration pop” usually isn’t theirs.

Options angle, because that’s the whole point here: cuts compress the discount rate and, as I mentioned earlier, that’s oxygen for long-duration equities. If you want convexity without renting the whole market, bull call spreads in QQQ or software names can be cleaner than outright calls when implied vol is elevated. In housing, call diagonals in XHB or ITB let you own time where the mortgage-rate tailwind might be, while selling shorter-dated calls against it to reduce carry. For regionals, I prefer call spreads over naked calls, fundamental dispersion is high and you don’t want to pay up for tail you don’t need.

Event vol is its own character. Into FOMC, implieds usually drift up, then bleed after the statement and presser. In 2024, SPX 1-week implied vol often added about 1-1.5 vol points into meeting week and gave most of it back within 24-48 hours after, nothing magical, just supply/demand around known catalysts. That timing matters: if you’re playing for the pivot announcement, owning premium ahead of the meeting and flipping to short gamma after is probably the right sequencing. If you’re playing the “cuts over quarters” story, you can finance exposure with call overwrites on up days or occasional put spreads on pullbacks to keep risk bounded.

Practical checklist you can actually run tomorrow:

• Rates: If you expect the first cut, consider buying duration via ED/ SOFR call spreads or TY/UXY calls; equity proxy is growth via bull call spreads. Size small, front-end can overshoot by around 7% in price terms on sharp days, but that’s my rough rule of thumb, not gospel.
• Sectors: Homebuilders via call diagonals; regionals via call spreads; REITs via calendars if you think the curve steepens later this year. Defensives? Sell rips, buy dips, no hero trades.
• Vol timing: Into FOMC, consider long calendars or straddles if implieds are cheap to realized; after, shift to short premium structures (iron condors, covered calls) if the statement clears big uncertainties.

Anyway, the thing is, a pivot moves the price of time first (front-end yields), then the price of growth stories, and only later the balance-sheet stuff. Trade the sequence, not the headline. And yeah, policy can change between breakfast and the close… but that’s just my take on it.

Offense if the Fed blinks: defined‑risk upside tactics

If the pivot tilts dovish, either a cut or a softer dots path, you want upside, but you don’t want to torch capital if you’re early. So, keep the premium tight and let the asymmetry do the work.

• Call debit spreads on rate‑sensitives (QQQ, IWM, XHB, XLF): Buy a call, sell a higher strike call, same expiry. You cap the upside, but you cut cost and vega risk. In plain English: a $5‑wide spread in QQQ often prices at ~35-55% of width when 30‑day IV sits around its middle percentile range, call it the 40th-60th percentile in calm-ish weeks. If the Fed hints at an easier path, growth and small caps usually respond first; IWM tends to be the “beta-on” cousin. Time it around events: earlier this year, front‑month implieds typically picked up 2-4 vol points into FOMC and bled after the statement. If you’re wrong, your max loss is the debit. If you’re right, you can still roll up and out. Actually, wait, let me clarify that: if spot rips fast, your short call will limit gains, so pre‑plan rolls.
• Diagonal call spreads: Long a longer‑dated call (2-6 months), short a near‑term call (2-6 weeks). You finance the long option while harvesting the post‑event decay on the short. It’s a nice way to keep upside exposure if you think we get a one‑two punch, initial relief, then follow‑through. Past FOMC weeks have shown near‑dated options can lose 20-40% of their implied premium within 2-3 sessions once the event premium evaporates, yes, that decay can be your friend. This actually reminds me of 2024 CPI weeks where the near‑term vol premium just… fell off a cliff.
• Risk reversals when skew is rich: Sell a cash‑secured put, buy a call, same expiry. Only if you’re genuinely willing to potentially recieve shares on a pullback. When put‑call skew gets wide, think puts 3-6 vol points over calls in QQQ or XHB around event weeks, you can finance most of the call. The trade breathes with direction more than volatility. And if skew normalizes after the pivot, you’ll look smart. If it doesn’t, you at least got paid on the put side.
• TLT/IEF call spreads to play falling yields: Duration does the heavy lifting. TLT’s effective duration has run ~17-18 in recent years, so a 10 bp drop in the 10‑year yield lines up with roughly a +1.7% price move; IEF is more like ~7-8, or ~+0.7-0.8% per 10 bp. Pairing a TLT call spread with a partial equity call spread (say, half‑size QQQ) diversifies the driver of returns, one pays if the curve rallies, the other pays if multiples expand. If the rally is all rates and not earnings, the bond leg carries you; if it’s growth sentiment, the equity leg does the work. And sometimes both help, sometimes both help.

Look, real talk: you won’t nail the exact timing. But these are defined‑risk ways to stay offensive. If the Fed blinks, beta responds, term premium compresses, and the price of time cheapens. Start with spreads, scale into diagonals if the first pop sticks, and keep the risk reversals only where you’re happy to own the dip, because dips still happen. Anyway, if we do get a dovish surprise later this year, I’d expect rate‑sensitives to lead, then the balance‑sheet stories catch up, then the value laggards, same movie, new soundtrack.

Defense if “higher for longer” hangs around: hedge the let‑down

So, if the Fed stays tight and inflation doesn’t behave, you don’t have to chuck everything into cash and sulk. You can spend a little premium to cap the hit. In the last real rates shock (2022), REITs dropped roughly 25% (VNQ total return), small caps fell about 21% (Russell 2000), and the S&P 500 was down ~19% for the year. That’s the sort of tape where defined‑risk hedges earn their keep. And yes, I remember trying to explain to a CFO why “transitory” didn’t help their multiple.. anyway.

• Put debit spreads on broad indices or the usual rate‑victims. Think SPY, IWM, or REITs (XLRE/VNQ). A straight put bleeds fast; a put spread cuts the carry. Example framing, not a quote: if SPY is 500, a 3‑month 5%‑down/10%‑down put spread (495/450) might run ~1.0-1.3% of notional in quiet tape; in a choppier regime it’ll cost more. You’re defining max loss (the net premium) and max gain (the width minus premium). In a grindy drawdown, spreads actually work. If the selloff is violent, you still get convexity without overpaying for far OTM tail that rarely pays on timing.
• Collars for concentrated positions. If you’ve got big single‑name exposure, sell an out‑of‑the‑money call to fund an OTM put. Accept some upside give‑up for real downside protection. A common setup is ~10 delta put financed by a ~15-20 delta call. In 2022’s spikes, the put skew was rich enough that collars sometimes cost near zero net premium; when VIX pushes above 30 (which it did several times in 2022), you can often roll these at little outlay. Today I’d still stagger expiries, monthly puts with quarterly calls, so you can re‑strike the downside if volatility mean‑reverts.
• VIX calls or call spreads for event‑risk insurance. This is your “airbag.” The problem is decay. The average VIX in 2022 hovered in the mid‑20s and still, out‑month calls torched capital for anyone who scaled too big. Keep it small, think 25-50 bps of portfolio premium across a quarter, and favor call spreads (say, VIX 20/30 or 25/35) to cut theta. Spikes toward 30-40 can hedge multiple bad things at once: CPI hot print, a sticky PCE run‑rate, or a Fed press conference where “higher for longer” gets underlined. I was going to walk through why term structure matters here, but the thing is your carry is set by contango/backwardation, if front VIX is below the back month, you’re paying a rent to hold the insurance, so keep it tight.
• Broken‑wing butterflies around support/resistance. If you like levels, say, SPY support near the 200‑day, you can buy a put fly with the lower wing “broken” (farther OTM) to bring net premium close to zero or even a small credit. You get positive convexity if price tracks into your middle strike, but you’ve engineered the ugly tail to be tolerable. It’s a trader’s hedge, not a buy‑and‑forget. Great around known catalysts (CPI, FOMC, jobs). Actually, let me rephrase that, great when you have a view on the path, not just the destination.

Look, the policy backdrop still isn’t exactly cuddly. The fed funds target has sat at 5.25%-5.50% since July 2023, and inflation has been choppy enough that the market keeps second‑guessing the path. When volatility pops, VIX over ~24 historically lines up with accelerated skew, puts get pricey, which is why spreads and collars beat naked protection most of the time. If you need a sanity check: in 2020 the VIX printed 82.69; in 2022 it tagged the mid‑30s multiple times; last year it mostly stayed in the teens/low‑20s. Different tapes, same lesson: size your insurance so you can renew it without wincing.

Positioning details I like right now (talking 30-90 days, roll as needed):

• SPY put spread: buy ~3-4% OTM, sell ~8-10% OTM. Budget ~75-150 bps per quarter depending on vol. On IWM/XLRE, skew is steeper, consider a slightly narrower width to avoid overpaying for tails.
• Collar on single‑name: 10d put financed by 15-20d call; target near‑zero net premium. If you just recieved a big run‑up, shift strikes closer to at‑the‑money to crystalize some protection.
• VIX call spread: 1-2 units per $1m equity risk is reasonable; don’t chase weeklies unless you’re okay torching premium.
• Broken‑wing put fly around support: center near the level you believe we test; push the broken wing far enough that margin is manageable and max loss is known. If price slices through, you’ll wish you’d gone with the simpler spread, but that’s just my take on it.

This actually reminds me of 2011 when people hated paying for insurance until they didn’t. If higher‑for‑longer lingers, your job is to live to fight the next upcycle. Spend a little, define the worst‑case, and keep enough dry powder to reload. You won’t look clever every month, but you’ll still be solvent to see the next rally, and that’s the whole point.

Harvest the vol: income after the announcement, not before

Look, the temptation is to sell premium right into the FOMC fireworks and feel like a hero. Don’t. The smarter money usually waits until the statement and presser clear, because implied vol tends to stay a bit sticky for a day or two while realized vol mean‑reverts. The Fed has eight scheduled meetings each year (statements hit at 2:00 p.m. ET, presser at 2:30), and the pattern is pretty consistent: pre‑event IV builds, the initial move happens, then price chops in a tighter band than the options were implying. So, you harvest after the noise, not before it. I think that’s the cleaner edge.

Post‑FOMC iron condors or credit spreads: if the first move is done and the tape calms, consider a wide, conservative iron condor on SPX/QQQ, something like selling wings outside the post‑event one‑day range plus an extra buffer. Keep widths and sizing small because 0DTE flow can still yank price around intraday. For reference, Cboe said 0DTE options were over 50% of SPX options volume in 2023, which, if I remember correctly, still affects how gamma pockets behave around key strikes. That flow can exaggerate tests of levels, so don’t crowd your shorts.

Cash‑secured puts on quality names: if the Fed’s path sounds a bit more dovish and financial conditions ease, this is when I prefer to get paid to wait. Sell cash‑secured puts on names you actually want to own, balance sheets you respect, consistent free cash flow, and pricing power. Target strikes near prior support or your estimate of fair value; for me that’s usually 1-1.5 standard deviations below spot on a 30-45 day tenor. You probably won’t catch the absolute low, but you’ll collect premium, and assignment is a feature, not a bug.

Calendars to rent cheap theta and vega: right after the event, near‑term options can still carry leftover event vol while back‑months are relatively calmer. A calendar spread, short the near‑term, long the back‑month, lets you own cheaper vega and theta while you bleed off the short. Structure it to minimize assignment risk: use same strikes around a magnet level, avoid short calls deep in‑the‑money on names with dividends coming up, and consider call calendars when you’re worried about short‑put assignment.

Manage the gremlins: gamma flips, alerts, rolling: always set alerts near gamma flip zones (dealers’ net gamma turning negative/positive around big strikes) and obvious technicals, prior day’s high/low, VWAP clusters, and the first hour’s range. Because 0DTE dominates flow, those flips can be messy. Roll early rather than perfectly, take 60-75% of max profit on condors and spreads and move on; this isn’t about squeezing the last nickel. Anyway, the thing is, income gets built by repetition, small bites, many times.

Quick data notes: 8 scheduled FOMC meetings per year, statements at 2:00 p.m. ET; Cboe reported 0DTE made up over 50% of SPX options volume in 2023. Those two facts alone explain why post‑event premium can stay elevated while realized vol settles down.

So, be patient, trade the drift, not the drumroll. And if you’re unsure, scale down. You can always add later this year when the next meeting gifts you another shot.

Rates in your portfolio: simple ways to trade the curve with options

Look, you don’t need swaps or swaptions to express a macro view, most of us are fine with ETF options and, if you’re comfortable, the small futures options. The big idea: decide the curve scenario first, then pick the cleanest options to express it. As I mentioned earlier, keep it simple and risk-defined.

Bull‑steepener view (cuts start to bite, long end rallies): If you think the front eases and the back end rallies harder, pair duration with cyclicals. I like TLT and IEF call spreads because they’re liquid and position-size well. TLT’s effective duration sits around the mid‑teens (think ~16-17 years) while IEF is closer to ~7-8 years, so TLT will usually move more on long-rate shifts. Structure? For later this year, consider December call spreads about 20-30 delta: e.g., buy TLT OTM calls and sell a further OTM call to cap it, and do the same in IEF. Then layer on cyclicals with XLF and XHB call spreads, if the curve steepens in a “good” way (growth not cracking), financials and homebuilders usually catch a bid.

Why this mix? It gives you two ways to win: the duration rally (TLT/IEF) and an equity beta kicker (XLF/XHB). If the bull steepener comes from inflation cooling and the Fed guiding confidence, that cocktail has, historically, been friendly to both duration and rate‑sensitive cyclicals. Small reminder: the New York Fed’s ACM model showed the 10‑year term premium flipping from negative to positive back in late 2023 (peaking around ~60 bps in October 2023), which is a nice reminder that the long end can move for reasons beyond policy rates alone.

Bear‑steepener risk (term premium widens even as cuts begin): This is the messy one. If cuts start but the market demands extra term premium, the back end sells off while the front end is anchored. In that world, your long‑duration equities can get tagged. I hedge with put spreads in long‑duration tech (think XLK, QQQ, or even SMH if you know the names). Keep them 1-3 months out, defined‑risk, and sized so your net theta doesn’t swamp the book. Basically, you’re covering the scenario where multiples compress even while the policy rate path looks friendlier on paper.

Small futures options, use only if you actually understand the plumbing: CME’s micro Treasury yield futures options are handy for precision (fractional notional and, typically, three‑digit margins per contract), but they come with assignment/margin quirks. If you can’t quote the tick value and what happens on exercise without Googling, just stick to TLT/IEF/SHY options. No shame in that, honestly, cleaner for most accounts.

Tactics and timing (the boring, profitable stuff):

• Ex‑div dates: TLT/IEF pay monthly; ex‑div is usually near month‑end/early month. Calls don’t recieve the distribution, so time your roll around that window to avoid weird pricing (carry/borrow shows up in the skew).
• Earnings + FOMC: Banks tend to kick off around the second week of October; homebuilders trickle through October-November; mega‑cap tech leans late October. We also have two FOMC meetings later this year, early November and mid‑December, so mind the rate‑sensitive earnings windows around those. Statement at 2:00 p.m. ET, as usual. Premium often stays sticky post‑event (Cboe said 0DTE comprised over 50% of SPX options volume in 2023), so you might get better entries a day or two after the fireworks.
• Sizing: I keep the curve package small per leg, like 0.5-1.0% of portfolio per spread ladder, and add on confirmation. Roll at 60-75% of max profit. It’s repetitive, I know, but it adds up.

One last thing: this setup isn’t magic. Correlations shift, and the curve can steepen for “bad” reasons. I still like the TLT/IEF + XLF/XHB call spread combo as a base case, with tech put spreads as the off‑ramp if term premium flares.. but that’s just my take on it.

Bring it all together: a simple, repeatable game plan

Look, I get it, events pile up in Q4, screens light up, and it’s easy to overtrade. Here’s the thing: you don’t need to be all-or-nothing on a potential Fed pivot or a messy earnings tape. Pair an offensive shot with a defensive seatbelt, stage in slowly, and keep the premium light so you can live to fight the next setup.

1. Plan A / Plan B: run one offensive trade and one defensive hedge so you’re never binary. For offense, I like a call spread on the beneficiary of a soft-landing or easing narrative, think TLT or IEF, or even XLF/XHB if the curve steepens for “good” reasons. For defense, buy a put spread on what’s most exposed if rates or term premium bite again, high-duration tech or beta proxies. Small widths, defined risk, nothing that nukes your month if you’re early.
2. Stage entries: basically three bites at the apple,
   • Toe-hold: a tiny pre-event starter (like 25-30% of your intended options size) a day or two before CPI/FOMC/earnings. If I remember correctly, I’ve regretted skipping the toe-hold more than taking it.
   • Announcement add: add only if price and vol confirm, get a closing bar through your level, or see implieds cool off after the first 15-30 minutes. Remember, the Fed statement hits at 2:00 p.m. ET.
   • Follow-through add: final add on day two or three if breadth and rates agree with your thesis. No follow-through? Don’t force it.
3. Keep premium modest and diversify time: cap total premium per theme at ~1-2% of portfolio. Split expiries, some October/November for the near-term catalyst window, some longer dated (Jan/Mar) in case the pivot narrative drifts. You’ll sleep better.
4. Track what actually moved: after the dust settles, write down which levers drove P&L, rates (2s/10s), vols (index vs single-name), and leadership (value vs growth, cyclicals vs defensives). Recycle capital into what’s working and cut what isn’t. Anyway, stay humble and keep tickets small; I still roll winners at 60-75% max value because, you know, greed.

Reality check: Cboe reported that 0DTE made up over 50% of SPX options volume in 2023. Translation, post-event pricing can stay jumpy, and you might recieve better entries a day after the fireworks when implieds cool.

Some quick guardrails I use, tight strikes around the expected move, avoid paying >50% of the spread width, and don’t chase if IV is at a 1-year percentile extreme unless I’m explicitly playing a vol crush. And yes, occassionally I’ll leg into the hedge first if skew is giving it away. Actually, let me rephrase that: if skew is really giving it away.

Want to go deeper next? Tackle the tax angle: how Section 1256 contracts differ from equities options, how collars work inside IRAs without margin, and whether credit spreads belong in your retirement bucket at all. I think most folks underestimate the after-tax drag, and the account-type constraints, far more than the trade selection itself.

Frequently Asked Questions

Q: How do I set up an options hedge if I’m not sure whether the Fed cuts or just pauses later this year?

A: Look, uncertainty is the baseline in Q3 2025. If you want a defined‑risk hedge that doesn’t guess the exact outcome: (1) Event straddle/strangle: Buy a 1-3‑month at‑the‑money straddle (SPY or your index of choice) around key prints (CPI, FOMC). If you want it cheaper, use a 20-30‑delta strangle. Size the premium to ~0.5%-1% of portfolio per month. Max loss is the premium; take profits if you get a 40%-60% pop in IV. (2) Put spread: Buy a 1-3‑month 20-25‑delta put and sell a 10-15‑delta put to reduce cost. Target a 1:1 to 1:1.5 debit/width ratio. This protects you in a 5%-10% drawdown without torching carry. (3) Collar on single stocks/ETFs: Own shares, buy a 25‑delta put, sell a 15-25‑delta call to fund it. Roll monthly or quarterly. It’s boring, but boring works when the VIX occassionally jumps to ~20 on headlines. Personally, I keep a small calendar of hedges so I don’t have to time the exact day the pivot chatter hits.

Q: What’s the difference between buying puts, running a collar, and a put spread to protect a 60/40 right now?

A: Straight answer: cost and coverage. • Buying puts: Clean, fast payout in a shock. Most expensive carry; max loss is the premium. Good if you expect a quick downdraft. • Collar: You buy a put and finance it by selling a call. Cheapest carry; you cap upside. Good for retirees or anyone who just needs to stay in the game. • Put spread: Middle ground. You buy a put and sell a farther OTM put. Cuts cost 30%-60% vs a straight put, caps your protection beyond the short strike. For sizing, hedge 30%-50% of your equity sleeve, and ladder expiries across 1, 2, and 3 months so you’re not hostage to one print.

Q: Is it better to buy VIX calls or SPY puts if I expect a hot CPI and a volatility pop?

A: If your bet is “volatility spikes,” VIX calls are the purer trade, but timing is touchy because VIX options settle to VRO and decay fast. If your bet is “stocks drop and vol rises,” SPY puts are more direct. Practical guide: • If you expect a quick, sharp move (1-3 weeks), use VIX call spreads (e.g., buy 20, sell 25) to tame decay. • If you expect a 3%-8% SPY drawdown over 1-2 months, buy a 20-25‑delta SPY put or a put spread. • Around CPI/FOMC, buy the week before; take profits 30%-70% on a vol pop or if delta jumps from 25 to ~40. And don’t chase the open, liquidity widens. I learned that the hard way in 2022 when I paid up into the print and watched the bid vanish by lunch.

Q: Should I worry about bonds failing me again like 2022, and what are alternatives if I don’t want to trade options?

A: Short answer: yes, be aware. In 2022 the Bloomberg U.S. Aggregate Bond Index fell ~13%, worst since 1976, so the stock‑bond cushion isn’t guaranteed when the Fed is both the shock and the shock absorber. If you don’t want options, alternatives: • Cash ladders and T‑bills: 3-12‑month ladder to clip yield and reduce duration risk while we wait on the pivot narrative. • Barbell fixed income: Mix short‑term bills with select high‑quality longer bonds; rebalance on swings. • Managed futures/CTA funds: Tend to like trending rates and commodities; diversifier when stocks and bonds fall together. • Low‑beta equity tilts: Quality, cash‑rich names, and lower volatility ETFs. • Defined‑outcome ETFs if you want embedded options without trading them. Anyway, the point is to pre‑decide your max drawdown and build around that. Decide what pain you can actually tolerate and stick to it, otherwise you’ll sell the lows, trust me, I’ve done it.

@article{best-options-strategies-for-a-potential-fed-pivot,
    title   = {Best Options Strategies for a Potential Fed Pivot},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/best-options-strategies-fed-pivot/}
}