Trader Insights Series

Actionable ideas for the power to trade smarter

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.


Options involve risk and are not suitable for all investors. Certain requirements must be met to trade options. Before engaging in the purchase or sale of options, investors should understand the nature of and extent of their rights and obligations and be aware of the risks involved in investing with options. Prior to buying or selling an option, clients must receive the options disclosure document, “Characteristics and Risks of Standardized Options,” available at: Supporting documentation for any claims, if applicable, will be furnished upon request.