A recent study by CIBC World Markets on the relative performance of various market sectors before and after a low point in interest rates revealed some interesting trends, and may present options traders with profit opportunities over the next six months or so.

The gist of the research revealed that in the six months before a low point in rates, banking, base metals, and transportation groups outperformed the market as a whole 80% of the time. In the six months following a rate hike after an interest rate trough, consumer durables, transportation, telecom services, and chemicals were the best performing sectors.

If, as seems now increasingly probable, the Bank of Canada begins raising rates after its self-imposed June 30 deadline, can aggressive options traders take advantage of these trends by establishing bullish positions in stocks or ETFs in the sectors identified in the CIBC study?

According to the research, transportation and telecom services produced superior returns in five out of five previous episodes of post-trough tightening. There are no Canadian ETFs for either the transportation or telecom services sectors, so options traders looking to capitalize on the post-rate-hike trend might consider bullish positions in individual companies within those sectors.

As for a specific option strategy, we return once again to the oft repeated position that premiums continue to shrink. Which as I have been suggesting in recent weeks, points towards option buying strategies. That position is particularly relevant in that sectors like telecom whose stock prices tend to be relatively stable, and where option premiums typically are in the lowest quartile among all TSX sectors.

For the telecom services, that would include companies like BCE Inc. (TSX: BCE, recent price $30.29), Manitoba Telecom Services (TSX: MBT, $32.67), Rogers Communications Ltd. (TSX: RCI.B, $34.29), and Telus Corp. (TSX: T, $37.70). As for the specific calls to consider, look at the BCE November 30 calls at $1.46, MBT October 32 calls at $1.65, RCI October 34 calls at $2.00 and the T Nov 36 calls at $3.10.

In the transportation sector, the trend would include companies like Canadian National Railway (TSX: CNR, $61.72) and Canadian Pacific Railway (TSX: CP, $57.76). With CNR, we looked at buying the July 60 calls two weeks ago (See: On The Road Again) at $1.80. Those options are currently trading at $2.75. If you did not take a position in CNR two weeks ago, you could look at buying the CNR September 62 calls at $2.70. With CP consider buying the Oct 58 calls at $3.20.