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Chicago Mercantile Exchange Eurodollar Locals Dazed and Confused
- Thread starter Point Man
- Start date
Quote from Maverick74:
Point Man, excuse my french, but what the f*ck are you talking about? Eurodollar traders don't trade the euro straight up, they trade spreads. They trade one month and one contract against another. They have over 40 contracts to spread against. They don't give a sh*t where rates go. Trust me, of all the locals in all the pits in Chicago, they are by far, and I mean by far in the best shape. And contrary to what you might think most of these guys don't touch the stock market so their savings is not gone. And I'm just going to ignore what you said about the Mrs running off with all their money. How many drinks did you have tonight?
Maverick,
I think I would tend to agree with you. Floor traders can be
1) arbitrageur
2) Speculators
3) Market Makers
And most(95%-99%) of them would be hedged or trade spreads. Why would they be directional unless they are speculators like some of the Market Wizards. But most floor guys scalp or arbitrage or spread various contracts against each other.
You do have a point. But that wouldn't stop the floor from going away if regulators allow a more aggressive push to electronic trading though.
trader99
Quote from Maverick74:
Point Man, excuse my french, but what the f*ck are you talking about? Eurodollar traders don't trade the euro straight up, they trade spreads. They trade one month and one contract against another. They have over 40 contracts to spread against. They don't give a sh*t where rates go. Trust me, of all the locals in all the pits in Chicago, they are by far, and I mean by far in the best shape. And contrary to what you might think most of these guys don't touch the stock market so their savings is not gone. And I'm just going to ignore what you said about the Mrs running off with all their money. How many drinks did you have tonight?
You sound the way these locals look lately. PISSED OFF I bet you have never run from one side of the pit to the other to get a trade. Come on upstairs and have a look. It is getting desperate. No one is making the kind of money they used to. Who will pay those hefty mortgages they got themselves into the past couple of years. The only hard work the MRS knows will be pulling into Target, hoping no one sees her.
Quote from trader99:
Maverick,
I think I would tend to agree with you. Floor traders can be
1) arbitrageur
2) Speculators
3) Market Makers
And most(95%-99%) of them would be hedged or trade spreads. Why would they be directional unless they are speculators like some of the Market Wizards. But most floor guys scalp or arbitrage or spread various contracts against each other.
You do have a point. But that wouldn't stop the floor from going away if regulators allow a more aggressive push to electronic trading though.
trader99
Trader99 the answer your looking for is greed. Greed is why the pits are still going. There is just too much at stake by shutting them down and trust me regulators are not going to do it. Let me give you an example. Say we have a futures contract on dogshit right and it trades 100k contracts a day on the screen and 50k in the pit right and the contracts are identical. So you say shut the pit down on dogshit right? Well lets say that of the 100k that trades on the screen at least 25k of that is coming from the pit as an arb or a spread right. So right now we have 150k contracts a day that trade total right? Say you shut down the pit. So now you lose the 50k from the pit plus another 25k from the arbs and the spreads that come out of the pit. So now you have a screen contract that trades 75k a day. So this contract basically got cut in half. It went from 150k a day to 75k a day. Now how many guys are going to jump ship because the liquidity just got cut in half? Maybe another one third. So now you have dogshit trading 50k a day on the screen. So thats 66% less contracts. The exchange doesn't want that, the screen traders don't want that, the pit guys obviously doesn't want it and the hedge funds obviously don't want that if they are arbing the two. So why would that ever happen? The truth is it won't until the demand for the pit traded contract goes to 0 or close to it. So if the volume was 150k on the screen and 10k in the pit, well now you have something, but trust me, until that happens, human greed will rule.
I trade in that pit. I have no mortgage. I own no stock, other than CME stock which I wouldn't sell at any price because of the dividends the CME pays. I trade all 40 ED contracts in packs, bundles, spreads, butterflies, condors, and on and on. I'm still waiting for the on line trading crowd to take on those who trade all those combos.
Quote from Point Man:
You sound the way these locals look lately. PISSED OFF I bet you have never run from one side of the pit to the other to get a trade. Come on upstairs and have a look. It is getting desperate. No one is making the kind of money they used to. Who will pay those hefty mortgages they got themselves into the past couple of years. The only hard work the MRS knows will be pulling into Target, hoping no one sees her.
Pointman do you even have a clue. That logic makes no sence. So let me get this straight. I guess screen trading is done too because 95% of daytraders are not making what they use to either. The screen is dead. Take a look upstairs, the prop shops are empty. All the daytrading bucketshops are going under. Even joe sixpack that use to trade internet stocks on his ameritrade account in his basement on his computer has thrown in the towel. So I guess the screen is dead. Yeah good logic. Oh and by the way pit traders don't run around moron. And yeah and those hefty mortgages you claim they have. Most of these guys made so much the last 10 years they paid cash for their home and are probably up 3x to 5x times their money. Oh yeah they are hurting alright.
Quote from GATrader:
Pointman kindly explain what you mean by 9900-9950? What transpired today that was not there previously? THanks
Eurodollars futures contracts are priced the same as T-bill futures. They are based on the IMM index = 100 - DY(discount yield). If the DY is 0 then the IMM index will be 100. The IMM index is merely a construction so the the bid price would be below the aske price. Think about it.
Anyhow, both contracts are based on $1M contract value. So, 1 basis point(bp) move results in $25 gain/loss. However, for ED futures, there's also someting called Add-on Yield which is calculated in similar way to T-bill futures. But the IMM index is based on LIBOR instead of 3month t-bill on the US yield curve.
The only difference is ED futures are cash settled and T-bill futures take delivery. People here should learn some bonds/fixed income derivatives. It's fun stuff. hehe. And very liquid. You wouldn't have to worry about liquidity problems in that segment for a long long time. Unless you are swinging around a few hundred millions in your account! haha.
Point man, I read your thread about people attacking you for whatever and after reading your comments; it's all bullshit mr. QDZ. I worked in the ED pit and you have no idea what's going on. An example , are these guys pricks? My boss would tutor inner city children, yeah that's right you jackass, some guy who made a couple of million dollars a year took time with some kid. Do these guys have money after the bear market, I imagine so since none of them I met were long for the bull market. The last thing, these are the most intellegent people on any exchange you'll ever find, bar none. If you knew jack about trading these things, you wouldn't say this shit.
Quote from Trajan:
Point man, I read your thread about people attacking you for whatever and after reading your comments; it's all bullshit mr. QDZ. I worked in the ED pit and you have no idea what's going on. An example , are these guys pricks? My boss would tutor inner city children, yeah that's right you jackass, some guy who made a couple of million dollars a year took time with some kid. Do these guys have money after the bear market, I imagine so since none of them I met were long for the bull market. The last thing, these are the most intellegent people on any exchange you'll ever find, bar none. If you knew jack about trading these things, you wouldn't say this shit.
No one is getting the trade they are used to. You can cut the tension with a knife. It is only getting worse as the Eurodollar rallies.
Quote from Trajan:
I worked in the ED pit and you have no idea what's going on. ... My boss would tutor inner city children, yeah that's right you jackass, some guy who made a couple of million dollars a year took time with some kid. Do these guys have money after the bear market, I imagine so since none of them I met were long for the bull market. The last thing, these are the most intellegent people on any exchange you'll ever find, bar none.
Yes I worked in the ED pit as well. Not everyone is hateful on the exchange. When I was there there were a lot of idiots and a lot more smart and respectable people .....
This seems to be a business that attracts a diverse array of talents: You might have a former car salesman standing next to a princeton grad professor in the pits.
Trading may be a bit tougher: And if it is and the market becomes less viable for a particualr strategy then just what do you think will happen ? Same as always ... People will shift their trading to issues that have a better play. Remmeber the Gold Futures pit ? Everyone that traded Gold in 1980 didn't get washed out of the business: they just changed which markets they traded ... Like always......