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To: Secret_Agent_Man who wrote (273853)	1/13/2004 10:13:38 PM
From: mishedlo	Read Replies (1) of 436258

You buy Eurodollar futures or Eurlibor futures. These plays have NOTHING per say to do with a bet on the direction of a currency. Eurodollars are a bet on interest rates held on US$, and Eurlibor is a bet on interst rates on the Euro. I more than doubled one account since Mid Sept betting that Greenspan would not hike. The futures had priced in enormous hikes (they still do). I am still in Eurodollars but yesterday I bought Eurlibor futures and options. Like the Eurodollars Europe has priced in rate hikes. Now, given the fact that Europe is bitching abut the strength of the Euro vs the US$ are they really about to strengthen it mor by HIKING interest rates? Nonsense, say I. I expect a surprise rate cut in Euroland, but even if that does not happen, I win if they just do not hike. We have had an enormous rally in both Eurodollars and Eurlibor since the DEC low, but there is nothing but upside ahead. Here is the Eurodollar chart futuresource.com Notice the curve 100 = 0 interst rate 98 = 2% FF rate 97 = 3% rate Pull of a chart on the March 05 ED contract Look and see the rally. Everyone but me was calling for hikes. The further out you go the more you can make (or lose) BTW there is about a .20 slack so 1%FF rate is really about 98.80 or so on Eurodollars Here is the British Pound futuresource.com You think those rates will stay there? I doubt it? They are priced for hikes as well. I gdoubt GB hikes. This one is neat Here is Euroland futuresource.com I bought the DEC futures No way IMO Euroland hikes I should make about 50 basis points Now, If Europe CUTS I can make 75 or 100 but I am comfortable That I make $ regardless as long as they do not hike. Fat chance to that. In Eurodollars 1 basis point is $25 That Mar 05 contract can rise 100BPs 100*25=$2,500 per contract The Euro contract is in Euros not US$ so factor according to euro vs $. Since the primary bet is on the INTERSEST vs the direction of the currency itself, the currency risk is there but it is small Hope that helps M

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