California Capital
Trading Group

  

 

Commodities and Financial Futures


 

California Capital Trading Group
13006 E. Philadelphia Street
Suite 311
Whittier, CA 90601
ph: 866-471-3801
fax: 562-846-4259
alt: Hablamos Espanol

Commodity Watch:
Eurodollars

image

image


Eurodollar Price Trend Chart (1985 - current)


(Click to view this chart full size.) 

 

What are Eurodollars?

(Click here for Wikipedia definition.)

Eurodollars is a financial instrument, not a currency, and based upon Federal short term interest rates in the U.S.  The value of the eurodollar and the interest rate are inversely proportional, as you'll see if you compare a chart of interest rates with a chart of eurodollar prices, so that the eurodollar can be expected to rise during economic recessions in the United States. 

  • Click here to view 

    Annual Federal Short Term Rates table

    Eurodollar values are inversely proportional to the U.S. federal interest rate.

     

    Strategy for Eurodollars Trading
    Let's look at this trade:
    We are looking at interest rates to be higher over the next year, and you see Eurodollars as the better way to take advantage of the long term move. We estimate rates going up by 2-3 percent by next summer, which would put Eurodollars at around the 9600 level.

    Strategy: "Bear Put Spread"     Buy the June 10 9800 put and sell the 9600 put, this portion of the trade would return a gross of 5000 with the market at or below 9600. our cost, around $250 not including commissions and fees. We also like the out of the money puts like the June '10 9650 put for less than $100.
    Risk DisclosureOnce again, we stress the importance of understanding all of the risks of any form of trading or investing that you choose to do. One should fully understand the worst-case scenario prior to trading or investing real dollars. Past performance is not necessarily indicative of future results. You take full responsibility for all trading actions, and should make every effort to understand the risks involved.
Eurodollar Contract Specifications:
Trade Unit:
Eurodollar time Deposit having a principal value of $1,000,000 with a three-month maturity.
Point Descriptions:
1 point = .01=$25.00
Contract Listing:
Mar, Jun, Sep, Dec, Forty months in the March quarterly cycle and the four nearest serial contract months. Product Code:
Clearing=ED
Ticker=ED
Globex=GE

 

DISCLAIMER: Futures and options trading involves substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or implied promise, guarantee or implication by or from California Capital Trading Group, LLC or Peregrine Financial Group, Inc., that you will profit or that losses can or will be limited in any manner whatsoever. Past results are not a reliable indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Such information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

California Capital Trading Group
13006 E. Philadelphia Street
Suite 311
Whittier, CA 90601
ph: 866-471-3801
fax: 562-846-4259
alt: Hablamos Espanol