Our recently launched Forecast Contracts covering Canadian economic indicators are presenting what I believe is an attractive directional combination trade that settles tomorrow at 8:30 a.m. ET. More specifically, I like the “No” answers to contracts asking if the Consumer Price Index for April will exceed thresholds of 1.7% and 1.9% year over year. Priced at $0.17 and $0.28, respectively, the total cost of this trade is only $0.45. Here’s why I think this a compelling opportunity:
First, my expectation of tomorrow’s headline figure is 1.7%, while the median economist estimate is 1.6%. If one of the two projections is correct, mine or the Street’s, the combination trade will pay out $2.00.
Second, if the CPI exceeds the 1.7% threshold but doesn’t climb above 1.9%, contract holders will still receive $1.00 after having committed only $0.45. In conclusion, this trade only loses money on a figure at 2% or higher.
Sources for Images: ForecastEx
Note: Prices are highest bids as of the morning of May 19, 2025. Red circles around the thresholds were inserted by J. Torres to highlight his preferred “No” answers throughout different thresholds.
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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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Interactive Brokers LLC is a CFTC-registered Futures Commission Merchant and a clearing member and affiliate of ForecastEx LLC (“ForecastEx”). ForecastEx is a CFTC-registered Designated Contract Market and Derivatives Clearing Organization. Interactive Brokers LLC provides access to ForecastEx forecast contracts for eligible customers. Interactive Brokers LLC does not make recommendations with respect to any products available on its platform, including those offered by ForecastEx.
Disclosure: Forecast Contracts
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.
Disclosure: ForecastEx Market Sentiment
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.
Disclosure: Forecast Contracts Risk
Futures, event contracts and forecast contracts are not suitable for all investors. Before trading these products, please read the CFTC Risk Disclosure. For a copy visit our Warnings and Disclosures page.
Disclosure: CFTC Regulation 1.71
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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