contradictory statement?

CFA Level III
#1

Could someone clarify this statement for me Put structures provide investors with partial defense against sharp increases in int rates. Agreed. This structure should be favoured as a outperformance vehicle only by investors who have a decidedly bearish outlook for int rates… isnt this contradictory to the first part?

#2

The second statement can only be true when compared to callables ie. putables outperform callables when rates decline. Although bullets outperform both callables and putables.

First statement seem correct.

#3

double post

#4

I still don’t understand the second statement. The value of a put option will go up only when int rates rise. Then why is the second statement true

#5

This structure (ie putables) should be favoured (compared to callables) as a outperformance vehicle only by investors who have a decidedly bearish outlook for int rates.

When rates are low (bearish) putables and bullets will behave the same.

#6

Thanks kobi!