In the world of European rates, the action is heating up. Traders are making bold options bets on the European Central Bank delivering at least a half-point rate cut by mid-2025. Three-month Euribor options expiring in June are in focus. According to Bloomberg data, volumes reached nearly 600,000 contracts on Wednesday, with open positions surging 75% to hit almost 2 million contracts. The stakes are massive. One standout wager could yield a €11 million payout—25 times the initial outlay—if the ECB slashes its deposit rate by 125 basis points across the next four policy meetings. This would require at least one half-point cut, a scenario that, not long ago, seemed more like a forecast than a gamble. ECB policymakers, speaking at the World Economic Forum in Davos, Switzerland, hinted at their intention to keep trimming rates as inflation edges toward the 2% mark. Markets are already pricing in a quarter-point cut at the upcoming January 30 meeting, with three more reductions anticipated by June. That’s not all—swaps suggest the ECB could deliver a total of four cuts by year-end. With markets evenly split on whether the Fed will cut rates once or twice in 2025, the outlook remains murky. ING strategists, however, see room for greater Fed easing, a dynamic that could pressure the ECB to go even further.