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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Condor who wrote (9874)	3/10/2004 9:10:20 PM
From: mishedlo	Read Replies (1) of 110194

Euribors are the equivalent of Eurodollars for Europe. Essentially it is a bet on interest rates. futuresource.com Change LEI to ED for eurodollars and to LSS for short sterling (UK interest rates). Right now the front month Euribor is 97.94 The DEC 05 (which is what I would recommend) is 97.10 You can see that it is prices for 84 BPs of rate hikes Now, I think Europe will cut once or twice. Even IF there is no cut you still make 84BP's If they cut 1/2 add another 25 BPs to that Each BP is 25 units (in this case Euros) I will let you do the conversion but in Eurodollars it is $25 (in Euros add the conversion rate and it will be worth more per point) Thus for an ED play equivalent (you would make 84+25 assuming a cut of 1/4) *25 = 2725 per contract. Convert to euros and make more casue price unit on Euribors is higher to start with. Of course you have currency risk but until profits are taken there is none. At any rate if you think Europe is not going to hike by dec 2005 this is simply a no brainer play that will make in excess of $3000 per future. Mish

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