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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Louis V. Lambrecht who wrote (5363)	1/17/2004 3:27:41 PM
From: mishedlo	Respond to of 110194

Louis, I have no idea how to take advantage of the TED spread. Russ might but I do not. To make any money at it you would have to do loads of contracts cause you are playing a small differential. Then you need to see the move go big enough to cover the cost of commission. Screw it, unless you really think it is going to move BIG in a hurry. Forget about trying to understand why there is a difference between the FF rate and EDs and just know that it is approximately 20 BPs right now and that has been the case for about a year. All I know is what is and that is. If you want to be more conservative, call it 25BPs, 1/4 point in interest and be done with it. That really is all you need to know IMO. Now here are the Eurodollars for the British Pound (called Short Sterling and god knows why, just as god knows why eurodollars are called eurodollars) futuresource.com Here are the Euribors (Euro interest rate play-a name that actually makes sense to me) futuresource.com BTW it appears there are about 10 BPs of difference given the Euro FF interest rate is 2.0 (This in euros - your acct is actually in euros on this trade). There is currecny risk but it is minimal compared to the movement in interest rates. If you do not think Euroland is hiking, buy some futures and be happy. If you think they are cutting (or want to reduce risk, buy some Dec or March calls. Here are the eurodollars futuresource.com In a nutshell it is all laid out. All you have to do is decide if the futures are priced for the action you think will occur. One final note. A Eurodollar future represents interest on 1,000,000 US$. I believe a Euribor is interest on 1,000,000 Euros. Mish