Easy ED trade

[Bobbybax]

Sell MAR22DEC23 @84

Roll front contract every 6 months as it expires

On a 40 lot, ur margin will be about $20k and u can make $80k over 2 years.

Fed has to raise rates over 84bps for u to lose money (if u hold the trade).

My view is Fed won't raise at all, and definitely won't raise more than 50 with a Dem in office.

Welcome all criticisms.

 

[maxinger]

easy money?

 

[maxinger]

ED - EURODOLLAR.


you are selling in the middle of the hilited rectangle.

I don't know how long the spread will stay within the rectangle.
It may be a few more months, a few more years, decades ...

all the best mister.

 

[Bobbybax]

Trading LIBOR spreads technically holds no value. Many people made millions up until 2008 by fading tops and bottoms in double flies and condors. The reason I'm not using a butterfly position for this trade is that the potential return versus the decrease in required margin is not sufficient.

I was hoping for a discussion regarding the fundamental aspects of the trade.

 

[Bastion_01]

Sell MAR22DEC23 @84

Roll front contract every 6 months as it expires

On a 40 lot, ur margin will be about $20k and u can make $80k over 2 years.

Fed has to raise rates over 84bps for u to lose money (if u hold the trade).

My view is Fed won't raise at all, and definitely won't raise more than 50 with a Dem in office.

Welcome all criticisms.

is there a particular reason you like eurodollars than an outright bet on treasury futures?

 

[Bobbybax]

I only trade long duration bonds like ZN as a spread against Bunds and CGB's. 3 month forward rates are basically a political animal. I find 10 year rates encompass too many variables to reliably predict.

 

[Bastion_01]

CGBs = Carribean Government Bonds?

 

[Bobbybax]

Canadian

 

[destriero]

Sell MAR22DEC23 @84

Roll front contract every 6 months as it expires

On a 40 lot, ur margin will be about $20k and u can make $80k over 2 years.

Fed has to raise rates over 84bps for u to lose money (if u hold the trade).

My view is Fed won't raise at all, and definitely won't raise more than 50 with a Dem in office.

Welcome all criticisms.

I like it. Also a long vol analog.

 

[Bobbybax]

Exactly. It can be used to hedge a dedicated long equity position.