Spotlight on Agency MBS TBA Options
Agency mortgage backed securities trade in the form of future contracts called mortgage to-be-announced or “TBAs.” Investors seeking to hedge their agency MBS holdings might consider options on TBAs, while investors seeking alpha might consider TBA options to take advantage of relative value by selling implied volatility. TBA options may also provide a protective strategy for investors who are leaning underweight agency MBS in anticipation of Fed tapering. For more insight, watch Ruke Ufomata explain.
