DLR — Oct 190/170 put spread
The September FOMC on the 15th and 16th is priced as a coin flip for a 25bp hike, roughly 58% on CME FedWatch after Kevin Warsh's hawkish Jackson Hole speech, and August payrolls came in at 162,000 against a 53,000 consensus. The 10-year touched 4.818% on Wednesday, its highest since November 2023. Digital Realty sits at 68.6% of its 52-week range with IV percentile at 15.8, so the downside is the cheap side of a chain that is not pricing a hike.
- Ticker: DLR
- Direction: Bearish
- Risk profile: directional
- Confidence: medium
- Catalyst: FOMC decision (25bp hike ~58% priced) (2026-09-16)
- Cohort: 2026-09-06
- Expires: 2026-09-13
- Max loss: $6.33
- Max gain: $13.68
Structure
- long put 190 2026-10-16
- short put 170 2026-10-16
Signals
- 10Y Treasury: 4.818% Wed, highest since Nov 2023; 4.76% Friday (web_search)
- August payrolls: 162k vs 53k expected; 2Y highest since Jan 2025 (web_search)
- Hike odds: ~58% for Sept 16 per CME FedWatch (web_search)
- IV percentile (52w): 15.8 — puts near the cheapest of the year (DB)
What invalidates this thesis
A hold paired with a dovish statement sends REITs the other way hard, and the hike is only a coin flip. Digital Realty's own leasing cycle is decoupled from rates in the short run, so a large new hyperscaler lease announced before Oct 16 overrides the macro entirely.