euribor outright trading

hi

ive been trading on euribor for a little while know and have a really simple question. I was wondering how you spot what prices spreads are trading out looking at the outrights. I normally go by the outright price that was brought or sold last, but this isn't always the case.

thanks for the help

Well, say you have H 795bid 800offered and M 850bid 855offered you know that, at the minimum the HM spread has a -60bid -50 offer implied from the outrights*... that doesn't mean that someone couldn't be improving the spread one way or the other (e.g. -55bid could be bid or offered).

And you won't see every trade in the spread go through in the outrights either. As a guide though say someone lifted the 8s on March and some 855s traded at the same time... you would know someone had been offering -55 on the spread and that just traded through the implied pricing.

So I'm afraid if you're really interested you'll have to watch the spreads as well!

*Except in very unusual combonations of purely implied outrights

I'm trading short sterling but rarely trade outrights, only when legging up spreads.

Just wondering why anyone would trade STIRS outright? Why not just trade bunds or gilts? To me the advantage of trading STIRS is the value of constructing flies boxes condors etc and scalping/nicking ticks from the position, keeping it moving and improving averages.

Arabian - you sound like you have success trading outrights.

Would be interested to hear where you see the the opportunity for stir outright trading. Are you using fundamentals, technicals, leaning on volume in the order book etc?

Great site by the way, it's good to be able to share your experiences with what seems to be an ever decreasing locals community

Well brucie I should probably first mention I am thinking of concentrating on the bund as an insurance policy incase the STIRs get worse (the concentration, of course, being because I have less experience of it)... but at the moment the opportunities in the outrights really are leaning on size (sometimes you have to imagine the size of course - some might call this front running but if someone has written 50 000 calls then you know damn well they have some delta to hedge, and why not help them?) and trading news. As for improving averages... I won't rule out averaging completely but only if I'm certain it's mean reverting but also a fairly random collection of paper (and thin)...

Just my two penny worht

You are coming at it from a completely different angle to me. You must have regular contact with non-local traders active in this market? All the traders I speak to are locals, bar one or two fixed income boys at Investment Banks who dabble in SS and Euribor. I am always interested in what they are doing and why, I feel like I am missing out on a whole other dimension to STIR markets. I rarely speak to them and as with most traders they are reluctant to reveal what they have on.

As in any market, I think you need a competitive edge to be successful, and against investment banks and hedge funds, locals are obviously at a huge disadvantage as regards fundamentals research etc. That's why I concentrate on the advantage we have, watching the same market all day, leaning on size and working on nicking anything they leave on the table.

i think there is a good mix. not sure locals always have the full appreciation of what is going on in the STIR markets......as arabian alludes there are option hedges, short term rate hedges, outright punting, hedges against almost everything, exotic gamma stuff allsorts.

i certainly didn't appreciate what was going on when i started my trading career as a local......

it's always interesting to hear what even experienced traders have to say about it.

nevertheless there are plenty of opportunities for locals to make a few ticks when clips go through regardless of spread. eg pay market for 250 lots is an order a broker might get and in these market conditions he is likely tom just lift the offer even if it there in 600 than join the bid and work it with a tick.....too dangerous.

brucemole said:

I'm trading short sterling but rarely trade outrights, only when legging up spreads.

Just wondering why anyone would trade STIRS outright? Why not just trade bunds or gilts? To me the advantage of trading STIRS is the value of constructing flies boxes condors etc and scalping/nicking ticks from the position, keeping it moving and improving averages.

Arabian - you sound like you have success trading outrights.

Would be interested to hear where you see the the opportunity for stir outright trading. Are you using fundamentals, technicals, leaning on volume in the order book etc?

Great site by the way, it's good to be able to share your experiences with what seems to be an ever decreasing locals community

Click to expand...

hello,guy, I am a fresh trader in short sterling market,I have a question how do you judge the fly is good or not? thank you,

If you get filled it's ****.

I do outright to express a view on where LIBOR/EURIBOR's going...