EuroDollar Futures

Archive for the ‘EuroDollar Futures’ Category

After the recent economic meltdown, many Americans are knee deep in debt. If you are one of them and facing troubles in paying back your creditors, it’s time that you consider some debt relief programs. You may choose from a range of debt relief programs like credit counseling, realistic budgeting, debt consolidation, or even bankruptcy. The program you select depends on your amount of debt and your level of discipline. However, the enormous amount of debt also had a significant effect on the American economy.

Although it started off on a positive note, the euro somehow toppled against the majority of its main currency contenders. This is because the euro-zone debt crisis constantly takes the investors away from the currency. With a probable enhancement in today’s US New Home Sales figure, it’s not very likely that the euro will turn around to its current bearish fashion.

Unemployment claims improve USD prior to holiday weekend

The previous US Unemployment Claims provided the USD with an extra boost against its chief currency competitors before the holiday weekend. The recent unemployment figure reached a level that’s even lower than what was expected by the analyst. It’s actually the poorest figure since April 2008. In the early hours of the euro zone debt crisis, when investors were searching for a secure haven outlet, the positive jobs statement provided them with an added encouragement. In the present economic condition, traders may expect further market instability. Numerous American indicators like the New Home Sales and the Core Durable Goods Figure report may lead to further monetary gains. Specifically, the New Home Sales record will probably play a significant role in the future trading session. Besides employment, one of the key contributing factors to the American economic crisis is home sales.

EUR unable to recover losses in Thursday dealing

In spite of initiating the day off on an optimistic note, the euro wasn’t able to retain its bullish trend. This happened due to a lot of reasons which forced investors to dump the currency. The decision of the ECB to set up a three-year refinancing process boosted expectations that the euro-zone debt crisis might be lessening. On the other hand, negative reports about the real condition of the European economies caused the currency back down. This report brought the USD/EUR perilously close to the major 1.300 level.

Moreover, positive US reports resulted in traders redirecting their cash to the steadier greenback prior to the Christmas Holiday. Analysts are of the view that the euro isn’t much likely to bounce back before the New Year and will hang on to its downward slide even in 2012.

Question Criteria:

June 3-month Eurodollar Futures contract rate is .35%
December 3-month Eurodollar Futures contract rate is .60%

Thus the market has built in 25 basis points into the longer term futures, but I predict the actual December futures rate will be much higher because the Fed is going to raise the federal funds target to fight inflation.

The December contract will rise relative to the June contract over the next couple of weeks. I want to establish a position so that I make million if the SPREAD moves 20 basis points in a favorable direction and lose million if it does the opposite. So…..

Which contract do I long and which do I short?
How many contracts of each must I purchase?

What is the current (ballpark%) margin requirement to take a position in Eurodollar futures?

Suppose the three-month LIBOR is 0.3% per annum and the six-month LIBOR is 0.9% per annum. Today you enter into a long Eurodollar futures contract with a delivery in three months. What is the cash flow you lock in to receive in three months (i.e., not the net value when closing out your position, just the gross amount that today you lock in to receive)?

How do you find out how much a put contract would cost.

Example:

The premium for a 99.00 Eurodollar futures put option is 0.55 and the spot price is 98.51

So i have the intrinsic value which is 25, but i am not sure how to compute the time value and how much that put contract would cost. Still trying to understand options.

Thanks.
@John W. No because this is a Eurodollar futures not a stock. I did figure it out. The IMM index is 99 and 98.51. For some reason my calculations kept coming out wrong, but i finally got it correct.

Hey guys, hoping you could help me out pricing an option for a Eurodollars futures contract? Im having a bit of trouble with it and was could use some help.
Thank you

The premium for a January 2011 99.00 Eurodollar futures put option is 0.58 when the January 2011 Eurodollar futures price is 98.51.
The option’s intrinsic value is?
Its time value is?
The put contract costs?
While the futures contract is worth?

A. hedging in the financial futures market.
B. hedging in the commodities market.
C. obtaining a Eurodollar loan.
D. pledging or factoring accounts receivable.

Whats the gain/loss to investor who is long two contracts

I understand the idea that Eurodollars are US Dollars that exist in foreign banks. What I don’t understand is how or why they are traded on the CME Futures market.

Could somebody explain what or how you gain from purchasing a Eurodollar futures contract?
What is their core market? Meaning, who is actually buying and taking delivery of Eurodollars and what are they using it for?

For instance – does their value depend on time to expiry? Or are they more like "betting on the price" regardless of time to expiry?
For instance: If I buy a eurodollar future contract may at 99.5 and sell at 99.49 – does it mean that I will lose a fixed (tick value…) – no matter how many days are to expiry?

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