How about âtransitory equilibriumâ?
- Or -
âThat thing that price should move around faster than that thing moves itselfâ.
Futures spread trading
- Thread starter Lucias
- Start date
How about âtransitory equilibriumâ?
- Or -
âThat thing that price should move around faster than that thing moves itselfâ.
Most of the profitable Chicago prop futures traders I have met the past twenty years do it all the time. By the time you pay the vigorish, the desk fees, the commissions, split those net profits with the house ( your backers ), and then pay the IRS at normal tax rates because you get paid as an employee on a W-2 - well, if you didn't accomplish those metrics then you couldn't bank anything. I'll say it again - every successful Chicago prop futures trader does that kind of metrics.
Not sure that's the term I'd use...
More like distribution of possible future "fair values". If you're able to locate areas where there's too much or too little "weight" vs a "reasonable" forecast, that's edge.
'Cause a) Eurodollars are super liquid; b) the relationships are more intuitive than other spreads; c) have reasonably liquid option markets available; d) offer the right amount of uncertainty that a market can actually meaningfully exist; and e) there's a whole lot of contracts, so you can form all sorts of multi-legged strategies.
As Martin so eloquently stated, Eurodollars are a spread trader's wet dream.
There must be thousands of different calendar combinations when you consider not only simple pairs, but flys and condors ad infinitum. You can also spread them against cash or Treasury futures, and they make fine hedging vehicles for all sorts of strategies including forward corporate financing risk and swaps market-making. Again, flexibility to the extreme.
Note that the vast majority of all corporate credit finance structures are typically quoted against LIBOR.
The CME website is chock full of very good educational white papers on the topic. Enjoy.
There must be thousands of different calendar combinations when you consider not only simple pairs, but flys and condors ad infinitum. You can also spread them against cash or Treasury futures, and they make fine hedging vehicles for all sorts of strategies including forward corporate financing risk and swaps market-making. Again, flexibility to the extreme.
Note that the vast majority of all corporate credit finance structures are typically quoted against LIBOR.
The CME website is chock full of very good educational white papers on the topic. Enjoy.
Even if something moves exactly inline with something else, there can still be a bid/ask spread to capture.
bone, what are your thoughts on spreads trades like Corn vs. Denatured Fuel Ethanol? Chart attached.