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Posted September 17, 2025 at 12:58 pm
There’s an 83% chance the Bank of Japan will maintain its current interest rate at tomorrow’s meeting, according to our IBKR ForecastTrader. Meanwhile, odds of a raise are 13%, presenting investors with an arbitrage opportunity that can often occur in new, modern markets like ours. Folks can buy the “No Change” contract for $0.83 and the raise contract for $0.13 for a total of $0.96 and get $1.00 back regardless of policymakers hiking or remaining on hold.
Initial unemployment claims have been volatile lately and reached a 47-month high in last week’s print. In light of the significant swings and recent developments signaling decelerating labor conditions, I find the risk-reward profile of the “Yes” answer at the 220k threshold attractive. It’s a level that is way below the median estimate of 240k and that hasn’t been breached since late July. It’s going for $0.94 and delivers $1.00 back to the investor on any number equal or greater than 221k. I’m avoiding the “No” answers here because another spike in filings could be in the cards soon.
Range Trade Idea for Japan’s CPI
In consideration of Japan’s Consumer Price Index (CPI) hovering at 111.9, I find the pricing of some contracts south and north of that level attractive. I believe it’s unlikely that costs will decline more than 0.4% month over month (m/m) to reach the 111.4 threshold while also finding it improbable that inflation will arrive above 0.3% m/m to exceed 112.2. Against this backdrop I favor the “Yes” contracts from 110.8 to 111.4 as well as the “Nos” from 112.2 to 112.6. The values of the instruments are ranging from $0.70 to $0.95.
Source for Images: ForecastEx
Note: Prices are highest bids as of the morning of September 17, 2025. Red circles around the thresholds were inserted by J. Torres to highlight his preferred “Yes and No” answers throughout different levels.
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Forecast Contracts are only available to eligible clients of Interactive Brokers LLC, Interactive Brokers Canada Inc., Interactive Brokers Hong Kong Limited, Interactive Brokers Ireland Limited and Interactive Brokers Singapore Pte. Ltd. Forecast Contracts on US election results are only available to eligible US residents.
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Displayed outcome information is based on current market sentiment from ForecastEx LLC, an affiliate of IB LLC. Current market sentiment for contracts may be viewed at ForecastEx at https://forecasttrader.interactivebrokers.com/en/home.php. Note: Real-time market sentiment updates are only active during exchange open trading hours. Updates to current market sentiment for overnight activity will be reflected at the open on the next trading day. This information is not intended by IBKR as an opinion or likelihood of a potential outcome.
This is commentary on economic, political and/or market conditions within the meaning of CFTC Regulation 1.71, and is not meant provide sufficient information upon which to base a decision to enter into a derivatives transaction.
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