Happy Friday, traders…

Jeff here.

When you hear about someone pulling off a 532% annual return, what do you think?

That I’m talking about some maniac penny-stock gunslinger? Or perhaps a 0DTE Reddit options gambler on the run of his life?

Nope.Brent Carlile, an experienced macro trader, did it by betting on the Fed…

If trading the Fed sounds boring to you … think again. There’s nothing boring about growing your entire account by 532% in a year.

While most traders were digesting headlines, debating whether the Federal Reserve would hike or cut rates, Carlile sorted the signal from the noise. 

He used Fed fund futures — a powerful tool that lets traders bet on where interest rates will be months or years from now — to book one of the most legendary returns in recent market history.

And if you pull back the curtain, a similar setup is arguably forming right now…

So, in honor of “Fed Week,” let me tell you the insane story of Brent Carlile’s Fed trade (and how you can make similar bets if you’d like)…

How Carlile Turned Fed Policy into a 532% Return

Carlile’s strategy was built on something simple: understanding the market’s reaction to the Fed.

Most traders only focus on what the Fed is doing in the near term. Is Powell raising rates? Holding steady? Cutting?

But Carlile knew better. He looked further ahead — not just at what the Fed was doing, but how the market was positioned for the future.

And in 2024, he saw something big…

Inflation was still sticky, but the economy was starting to weaken. Job growth was slowing, consumer spending was cooling off, and corporate earnings were flashing warning signs.

Yet, the market was still pricing in a “higher-for-longer” Fed stance.

Carlile knew this was wrong.

With economic data deteriorating, he bet the Fed would pivot faster than the market expected.

The Setup: A Mismatch in Expectations

And here’s where it gets interesting…

Carlile wasn’t trying to predict the Fed. He wasn’t reading tea leaves, waiting for Jerome Powell to give some magical clue. 

Instead, he looked at how traders were positioned.

At the time, Fed fund futures showed the market expected rate cuts wouldn’t come until much later in 2024 or early 2025.

But Carlile’s analysis told him otherwise.

Economic data was coming in weaker than expected. Inflation was still above target, but it was falling. 

And with a presidential election on the horizon, the Fed had extra motivation to ease financial conditions.

Carlile saw a perfect storm brewing:

• The market was too hawkish (expecting rates to stay high).
• Economic data was rolling over (increasing the chances of cuts).
• The Fed would have no choice but to pivot (sooner than traders expected).

All he had to do was place his bet before the market caught on.

The Trade: Leveraging Fed Fund Futures

Carlile didn’t go all-in on stocks. He didn’t buy long-term bonds…

He went straight to Fed fund futures.

These futures allowed him to bet on where short-term interest rates would be months or even years in advance. 

When expectations shift, these contracts can move fast — and that’s exactly what happened.

Carlile built his position early, buying contracts that would profit if the Fed started cutting rates sooner than expected.

As weak economic data kept rolling in, the market finally caught up.

Traders started pricing in rate cuts sooner, just as Carlile had anticipated.

His futures contracts exploded in value.

By the time the dust settled, he had locked in a 532% return.

How You Could Make Similar Bets Using Options

Not everyone has access to Fed fund futures, but options traders can make similar bets — often with even more leverage.

And as the Fed plans to cut rates twice this year … If you can time your trades with these policy decisions, you can potentially book some serious returns, just like Carlile did…

Here’s how:

1. Betting on Rate Cuts with Bond ETFs
   
   • If the Fed is forced to cut rates, bond prices will rise as yields drop.
   • The TLT ETF (which tracks long-term Treasury bonds) tends to rally when rates fall.
   • Buying call options on TLT is a simple way to position for a Fed pivot.
2. Betting on Rate Cuts with Bank Stocks
   
   • Lower rates can be near-term bearish for banks because they make less money on lending.
   • If you expect the Fed to cut, you could buy puts on XLF (the financial sector ETF) or individual bank stocks like JPM or BAC.
3. Betting on a Market Rally
   
   • When the Fed cuts, stocks usually rip higher in the short term. 
   • Growth stocks tend to benefit the most from rate cuts.
   • Call options on QQQ (Nasdaq ETF) or tech stocks like AAPL, MSFT, or NVDA could be big winners.
   • But be careful. You have to time this correctly. 

The key is positioning before the market realizes what’s happening — just like Carlile did.

Of course, I’m not suggesting you trade something you don’t understand. So, if this doesn’t sound like it would fit into your strategy, don’t make some random Fed trade just because I told you this guy made a bunch of money.

However, this legendary play proves that the biggest trades are often macro trades. 

By understanding how the Fed moves markets — and how traders position themselves around those moves — you can set yourself up for massive wins.

The question is: Are you paying attention?

Happy trading,
Jeff Zananiri

P.S. My #1 strategy right now is Burn Notice trades…

They’re quick, overnight options plays that won’t overexpose you to broader market risk.

If you want to understand exactly how (and why) these trades are perfect in this environment…

Join Danny Phee for a LIVE BURN NOTICE WORKSHOP … This SUNDAY, March 23 at 1:00 p.m. EST

Stop guessing, start burning — Click here to reserve your seat. 

*Past performance does not indicate future results