rolling out to mar zn

Not advising here as i am not qualified but, if you believe 10 year rates will rise, you may also believe
that will be due in part at least, to the predicted normalization of rates and the ending of ZIRP.
If so then look at a eurodollar futures contract( 3 month LIBOR).
A contract for a relatively near 3 month contract does not move much but the 3 month contract 5 years out
is more sensitive/volatile. I think 2014 saw about a 100 bp. drop in the contract 5 years out.
This is $2500 return on a margin of about $700. No roll. Expiration is 5 years away.
Seems a decent way to express a long term view rather than the issues of continuously rolling
(Which i dont understand)
Good luck.
 
eurusdzn said:
Not advising here as i am not qualified but, if you believe 10 year rates will rise, you may also believe
that will be due in part at least, to the predicted normalization of rates and the ending of ZIRP.
If so then look at a eurodollar futures contract( 3 month LIBOR).
A contract for a relatively near 3 month contract does not move much but the 3 month contract 5 years out
is more sensitive/volatile. I think 2014 saw about a 100 bp. drop in the contract 5 years out.
This is $2500 return on a margin of about $700. No roll. Expiration is 5 years away.
Seems a decent way to express a long term view rather than the issues of continuously rolling
(Which i dont understand)
Good luck.
More...
ok, thanks for the reply, I will take a look at that, this is not a trade which requires any timing, it's just a bet, as you say, on normalization, but everybody who knows more than me has already priced it in. I just can't see why at this time in history I should loan any more money to the United States Government, so I'm just exploring shorting those that do. Maybe the reason they call it a "No Brainer" is because the only people who do it have no brains.

at anyrate, I'm sitting in cash losing money everyday, I can either buy bonds or sell them or do nothing. I'm a trader and no stranger to volatility, and man, that doing nothing sure feels good right now.
 
ah the heck with it, I have a paper account, I just sold one pretend MAR zn for 127 and some change, in a couple of months I'll be an expert

I don't really like starting off with just one, later on it creates a lot of problems if you need to add to a winner or lighten up on a loser

oh well, gotta start somewhere, I'm going to be really pissed if this pretend trade makes money, so far that isn't a problem, I'm already paying for the spread and the commission
 
It's a very tough mkt for rates guys these days. Everyone got involved post the taper tantrum, since it was just so obvious to everyone which way the wind is blowing. The rest is history.

Is what we're witnessing here is a massive bond bubble in the making (if not already made), which will one day result in a 1994-style repricing? Or is the mkt sending a correct signal about future stagnation? It's a very very tough call to make and the macro community got it so wrong this year, it's not even funny...
 
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No kidding, i had a "professional" money manager dollar cost average me into one of Washinton Mutuals
Stock funds over the couse of the year. The "parking" place was an intermediate term bond fund. The year was 1994.
Ouch.
Sp500 was up 2% if i remember.

"An idiot can advise a moron" . That one is mine.
 
I haven't seen a client do anything in the longer term rates in quite some time. No real interest or appeal in the Eurex or CBOT spread plays in terms of what strikes our fancy. Virtually everything I've done or seen a client do for probably the past 24 months rate-wise has been in the STIRS (Eurodollars, Gilts, Euribor) and it's typically along the lines of a butterfly or condor construct with modest duration.

It's slow, it's not sexy, it's a three to six month swing trade typically, but quite frankly it's the best play we've been able to come up with.
 
well, so far so good, my one pretend mar zn which I sold last Sunday 11/30/2014 for 127 and some change is still just sitting there, behaving more like an annuity than a trading vehicle, and I'm scratching my head, "And why again am I not doing this with serious real money?"

it seems like everytime the fed breaths, winks or nods they tilt my paper account a little more in my favor
 
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