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Strategies & Market Trends : Waiting for the big Kahuna

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To: Real Man who wrote (67095)	10/30/2003 4:19:02 PM
From: mishedlo	Read Replies (3) of 94695

Well I balanced out my trade today by shorting fed fund future calls. Also shorted Eurodollar puts. Those fed fund calls have 2-1 ratio almost over eurodollar so in case there is a terrorist attact and fed cuts rates by 1/2 I do not want to lose my ass. So I bought some cheap Eurodollar calls as a hedge against that. Sheeesh. Why they were selling the eurodollar calls far below the fed fund calls I do not know (they are not exactly a bet on the same thing but quite similar with nuances) but if in may-jun of next year we are somewhere between +- 1/4 either way on fed funds I am going to make a killing. As long as we stay +- 1/2 I think I do just fine as well. Only a 3/4 hike or more kills me and I really really doubt it by may of next year. My maximum return for the MAY/June plays I put on today is precisely rate hike of 1/4. I pocket the short calls, make money on the long calls, and pocket the short puts all at once. But I make out huge anywhere between +- 1/4 and do ok +- 1/2 I like my odds. Have bigger gains now even if they hike as long as it is not too much. Mish

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