Scalper1 News
Summary What we’re trading and how. Full disclosure of trade entry, objective and strategy. If the Fed’s expectations for rates are right this position will appreciate from $2,050 at 0.82% to $5,000 at 2.00% by December 19, 2016. Linked is an interactive risk/reward spreadsheet enabling you to experiment with any potential outcome for this trade or your own trading criteria. I’ve included instructions on how to use the interactive risk reward spreadsheet. Three-month deposit rates outside the Treasury system (Eurodollars) are the most liquid futures contract on the board. Open interest (contracts outstanding) is greater than the Dow, S&P, Gold, Silver, Crude Oil, Gasoline, Euro-FX, Yen, Pound, Canadian and Australian dollars combined. (6.9 million versus 11.3 million) Click here if you’re not familiar with what this rate is, how it’s set and the underlying futures contract. Capturing the move higher This simple trade runs through December 19, 2016. Short the December 2016 ( GEZ16 ) 3 month rate futures contract at 99.18, trading this rate higher from 0.82% contract value $2,050. Objective = 98.00, rate 2.00% contract value $5,000 consistent with the lowest of the Fed’s disclosed expectations . Click here to enlarge the rate, price valuation chart below A short 99.18, B objective 98.00. (Video 1:59) Last objective guidance of where Fed Chair Yellen sees the Fed funds rate and when. Source: Federal Reserve Correlation between the Fed funds and 3-month deposit rates (Eurodollars) the average for the 3 month is +.25% to Fed funds. (click to enlarge) Qualify risk/reward by experimenting with any potential outcome for this trade and match it to your current risk investments. Click here and open the December 2016 risk/reward spreadsheet. When the spreadsheet opens enable it. Click here for current quotes and charts (December 2016) enabling you to track this trade or experiment with any potential outcome for this trade using the data on the Exchange’s site. How to use the spreadsheet 1) Entry Price = short December 2016 at 99.18 (B-9) 2) Enter any contract price in cell B-3 3) C-3 Shows the rate the contract price represents 4) D-3 Initial investment 5) E-3 Net profit or loss 6) F-3 Net liquidating value 7) C-4 Deposit per contract Any entries can be changes to experiment with your own criteria. Click to enlarge Click here for the CME Fedwatch for rate expectations Scalper1 News
Scalper1 News