Background: I'm looking to hedge against rising 30-year mortgage rates while we shop for a house. I can afford a small swing, but if there's >1/2% rise in mortgage rates, I'd like to recoup some of the added expense.

My strategy is that I plan to buy out-of-the-money puts on IEF in an IRA account. The way I look at it is that the amount out of the money will act as a "deductible" on my "insurance policy," and the cost per contract is essentially the insurance premium. I need to buy about 100 contracts to cover what I believe is a good representation of my mortgage rate risk.

I'm looking at the 104 June 2015 puts because it looks like a good balance between a reasonable time premium and reasonable open interest. Current ask is $0.20/share, which is about the limit for what I'd like to spend to do this.

The problem I have is that there's a 25% price difference between $0.15 and $0.20 per share, which is a terrible level of precision. I don't want to pay as much as 25% more than I actually need to. I have no idea at what point the market makers will raise the ask to $0.25, but of course ideally I'd buy them right before that.

Is there another equivalent high-volume ETF that would accomplish the same thing without this problem? I've given up on futures in an IRA, so futures are out. Are there other strategies where I could get better pricing precision without spending any more on the contracts? Why in the world is the precision so low on the exchange?