(Bloomberg) -- A large option bet on quicker rate-hikes by the Federal Reserve got bigger this week, even as officials pushed back against hawkish expectations.

The wager -- carrying a notional value of $40 billion -- is focused on a possible surprise at the annual August symposium in Jackson Hole, which has been used in the past by central bankers to signal changes in monetary policy. The positions are now the third-biggest of any Eurodollar options.

As it stands, Eurodollar futures -- which are priced off three-month Libor -- imply a bit less than five 25 basis point rate increases by September 2024. This option play, focused on contracts expiring the month after Jackson Hole, is looking for traders to add another two Fed hikes to those expectations.

The trade began last week through risk reversals -- where the investor purchases put options that pay off if rates rise, but offsets the cost by selling those which benefit from a fall -- in a position exceeding 150,000 contracts, according to U.S.-based traders, who declined to be identified as they aren’t authorized to speak publicly.

The put option bought was the 98.00 strike, equivalent to markets pricing for a 2% Libor fix by September 2024 versus around the 1.50% that is expected now.

Read: More details on the initial risk reversal flow

The size was already large enough to get tongues wagging among brokers. There was another spate of buying this week, though solely in the put strike. There’s been around 250,000 put options bought, which combined with the initial risk reversal flows, mean about 400,000 puts have been placed, the traders said.

Following Thursday’s purchase, preliminary open interest -- a measure of outstanding positions -- surged again, with the position in this strike now the third largest of any Eurodollar options.

See here for detail on prices paid in latest put option purchase

The wagers have continued to be placed despite Fed officials this week pushing back on market expectations for policymakers to start discussing a tapering of the central bank’s bond-buying program.

(Updates to include data showing scale of option bet in second and seventh paragraph)

©2021 Bloomberg L.P.