Pouring Fuel On The Fire
Trump’s $200 Billion QE For Housing—And How We’re Positioned
At his press conference today, President Trump announced that he’s directing the government-sponsored enterprises (Fannie Mae and Freddie Mac) to buy $200 billion in mortgage-backed securities in an effort to drive mortgage rates down. (ZeroHedge)
The basic idea: have the GSEs hoover up MBS, push yields lower, and translate that into 30-year mortgage rates starting with a “4” again — ideally in time to juice the housing market ahead of November.
As policy, I think that’s a mistake. As investors, my subscribers and I are positioned to profit from it.
Why I Think This Is Bad Policy
If your goal is to make housing more affordable, the most direct way to do that is to bring prices down or at least stop them from running away from incomes.
All else equal, lower mortgage rates push prices up:
Cheaper monthly payments let buyers bid more for the same house.
In a supply-constrained market, that extra borrowing capacity mostly gets capitalized into higher prices, not “affordability”.
The people who benefit most are existing owners and leveraged speculators, not first-time buyers.
If Trump really wanted to fix affordability, a better approach would be to drain leverage from the system, not pour gasoline on it. For example:
Require GSEs to only buy or guarantee mortgages with 20%+ down payments (80% or lower LTV), or
At least sharply limit their exposure to low-equity loans and serial cash-out refis.
That would be painful in the short run, but over time it would likely:
Bring prices closer to what people can afford on real incomes, and
Reduce the boom-bust cycle that keeps blowing up housing and the broader economy.
Instead, this is effectively a form of targeted QE for housing finance. It props up asset prices, deepens moral hazard, and makes the ladder even harder to climb for people who aren’t already on it.
Policy Preferences vs Profitable Trades
None of that means you fight this as an investor.
A big trap in macro investing is conflating:
“I think this policy is bad or unfair”
with“Therefore, I should bet against the beneficiaries of this policy.”
Markets don’t care that I’d rather see leverage drained out of the housing system. What matters is:
Capital is about to be forced into mortgage paper.
That’s supportive of housing-linked beta and anything tethered to transaction volumes, refis, and home turnover.
So my stance is:
As a citizen, I think this is a mistake.
As an investor, I’m happy to front-run the flows.
Which brings us to a trade my subscribers and I put on a month ago that’s well-positioned for this.
How We Structured A Levered Bet On Housing Beta
On December 3rd, in a trade alert, I shared two trades. One of them was on Opendoor Technologies (OPEN 0.00%↑)—an obvious beneficiary of easier housing finance and lower mortgage rates, if Trump managed to engineer them.(blog.portfolioarmor.com)
Here’s the OPEN structure:
Today’s Second Top Names Trade
The stock is Opendoor Technologies (OPEN), and our trade is a hybrid combo consisting of these four legs:
Buying the $7 strike call expiring on September 18th, 2026,
Selling the $11 strike call expiring on May 15th, 2026,
Selling the $6 strike put expiring on May 15th, 2026, and
Buying the $4 strike put expiring on May 15th, 2026,
For a max net debit of $0.75. The max gain on 2 contracts is uncapped, the max loss is $550, and the break-even is with OPEN at $5.67.
That trade filled at an average cost of $0.725 on 12/3/2025.
The logic:
The Sept ’26 $7 calls on OPEN were expensive (about $2.65 at the time).
Rather than pay that outright, we:
Sold a near-dated $11 call (May ’26),
Sold a $6 put and bought a $4 put (a bull put spread) in the same May cycle,
And used that near-term premium to drive down the effective cost of the long-dated $7 calls.
If OPEN is between $6 and $11 in May 2026:
The May $6–$4 put spread and the May $11 call should all expire worthless,
And we’re left holding the Sept ’26 $7 call with uncapped upside above $7,
For a net cost of ~$0.73 instead of ~$2.65.
In other words, we turned a pricey long-dated call into a much cheaper, financed call by renting out some near-term convexity we didn’t mind losing.
After Trump’s announcement, OPEN traded up more than 12% after hours to around $7.23, putting that long $7 call in the money already.
I didn’t know Trump was going to have the GSEs do QE-style mortgage purchases. What I did know was that:
OPEN had surfaced again as a Portfolio Armor top name,
The structure above gave us asymmetric upside if anything loosened up housing finance,
And the downside was defined and tolerable.
Now policy has shown up to help the trade.
“We Knew Trump Would Do QE”? No—But The Names Often Line Up
To be clear: I didn’t sit down in December and say, “Trump is definitely going to unleash $200B in GSE MBS buying; better buy OPEN.”
What I did was:
Let Portfolio Armor’s ranking system surface tickers with unusually attractive six-month upside profiles, and
Apply our usual filters and structure playbook to turn those into defined-risk, convex positions.
Since late 2022, Portfolio Armor’s Top Names have, on average, returned 20.38% over the next six months, versus 10.23% for the SPDR S&P 500 Trust (SPY 0.00%↑).
The mechanism isn’t magic. The algo tends to:
Favor names where options markets and price action suggest asymmetric upside,
Some of which later get catalysts: earnings surprises, M&A, regulatory shifts… or, in this case, macro policy.
The pattern I’ve seen repeatedly is:
First, the names show up on the list.
Then, one to three months later, the story people tell about them shows up in the news.
That’s exactly what’s happening here:
In early December, OPEN shows up as a top name; we structure a cheap, levered upside bet on it.
In early January, Trump announces housing-specific QE via the GSEs and the market starts to re-rate housing beta.
Where This Leaves Us
As a macro/policy matter, I think Trump’s $200B GSE MBS purchase plan:
Worsens long-term affordability,
Deepens moral hazard in the housing market, and
Reinforces the idea that the U.S. will always bail out leveraged housing risk.
As an investor, I see:
A direct tailwind for housing-linked names like OPEN,
A confirmation that the Portfolio Armor top-names list is still surfacing tickers ahead of important catalysts, and
Another reminder that your P&L cares more about positioning than purity.
You don’t have to cheer for a policy to trade the consequences of it.
My subscribers and I are already in position on OPEN. If you want a heads up when we place our next trade ahead of a catalyst, feel free to subscribe to the Portfolio Armor Substack below.