Why wouldn’t buying interest rate puts be a good strategy to hedge against declining bond values. As the interest rates rise, the bond price will go down. But if you are long a interest rate put (not an FRA), you benefit in a rising rate environment, right? Why wouldn’t this be a valid hedge?
I believe when you talk about interest rate options, always refer to the yield, rather than the price. So when you say buying interest rate PUTS, options will lie in the money when the final interest rate is BELOW the strike. So buying puts is a good strategy to hedge against RISING bond values.
I get 'ya