1 ‘Lottery Ticket’ Options Strategy That Lets You Bet on a ‘Big Short 2.0’ Crash in Junk Bonds

Group 1 - The junk bond market is showing signs of distress, which could lead to a significant breakdown in the stock market, as observed during the Great Recession in 2008 [1] - Current credit conditions are unfavorable, with rising consumer debt and potential defaults on various loans being mitigated by favorable borrowing terms, delaying a market sell-off [2] - The trend of "buy now, pay later" in retail parallels the corporate bond market, where investors are drawn to above-average yields from lower-quality bonds [3] Group 2 - Historically, bonds rated below BBB were labeled as "junk bonds," associated with speculative companies that contributed to financial market crashes [4] - The iShare Iboxx High Yield Corporate Bond ETF (HYG) has shown low default rates and competitive returns, but concerns arise regarding the underlying businesses within the ETF, which holds nearly $20 billion in assets [5][6] - The HYG and similar ETFs have become a single trade for large investors, moving away from individual bond purchases, which raises concerns about market stability if significant investors are over-leveraged [6][7]