I've searched but I can't find where this has been discussed before. ARM rates are often tied to the LIBOR rate. There is a CME future for one-month LIBOR rates. http://www.cme.com/trading/prd/ir/libor_FO.html Could someone with an ARM mortgage use this product to protect an increase in their mortgage payments? One could either short the future or buy puts to take advantage of rising rates. The initial/maintenance margins are 650/500 per contract. Seems like this would have been a low risk investment starting in mid 2003 to early 2004. Many are and will be defaulting on their mortgages and losing their homes. All because of rising mortgage payments. It looks to me like they could have largely hedged this problem with EM futures. If I was a loan officer and I knew this I would tell everyone who was getting an ARM about it. Would this simple investment have avoided the sub-prime fiasco? This is too simple - I must be missing something. If so, I sure would certainly appreciate it if somebody would point it out to me.