Sep 08-Sep 09-Sep 10 Euribor Fly

[arabianights]

I'm kicking myself because I just sat there hesitating about buying this at -.625 earlier today; I've stuck a 30 lot GTC in incase I get a chance to buy it later, but I wonder what others think about it... I don't trade spreads usually. I think there could be quite a few ticks in it as I can't see lower rates in 09 then higher again in 10.

 

[arabianights]

P.S. Here is a weekly chart, which does look a bit scary from the pov of going long:

 

[arabianights]

Was asked wtf I was playing at when I got around to buying 20 lots of this today and was told to sell it, took a half tick on twenty lots, but a third of that went on commission :'(. Could have made quite a bit more out of it, even today.

Does anyone else here have a view on it? Honestly I think it's a great long term trade.

 

[RichieE]

I'm kicking myself because I just sat there hesitating about buying this at -.625 earlier today; I've stuck a 30 lot GTC in incase I get a chance to buy it later, but I wonder what others think about it... I don't trade spreads usually. I think there could be quite a few ticks in it as I can't see lower rates in 09 then higher again in 10.

Sorry - Your graph has confused me. It shows a minimum value of neg 0.57 but you're talking about buying at neg 0.625. Did it fall that low? Do you have any idea why the spread has collapsed and any rationale for it bouncing back?

I don't trade the EURIBOR but a few guys in the office have got caught out by it recently so I'm not touching that with a barge pole!

 

[arabianights]

Sorry - Your graph has confused me. It shows a minimum value of neg 0.57 but you're talking about buying at neg 0.625. Did it fall that low? Do you have any idea why the spread has collapsed and any rationale for it bouncing back?

I don't trade the EURIBOR but a few guys in the office have got caught out by it recently so I'm not touching that with a barge pole!

Oh ye of little faith

Straight line up to -0.375 now, where I'm closing my paper trade.

 

[Atilla]

I'm kicking myself because I just sat there hesitating about buying this at -.625 earlier today; I've stuck a 30 lot GTC in incase I get a chance to buy it later, but I wonder what others think about it... I don't trade spreads usually. I think there could be quite a few ticks in it as I can't see lower rates in 09 then higher again in 10.

I think two paths at work here.

Incidents like SocGen and Northern Rock can rock other Euro countries also.

How do we know other European banks do not have the same level of exposure to US sub-prime as the US banks. Lack of transparency increases risk.

So on one hand high risk and liquidity crunch likely to raise rates

On the other depressed markets and talk of recession falling output may signal a fall in rates.

Which has greater impact or relevancy in what time frame is anybodies guess and so the volatility as traders play dare/scare strategies.

I can't see your charts by the way.

However, I wouldn't have said it's a fair bet either way. More dunno at the moment. I would say recession for sure with some pick up possibly at end of year but this is not certain. May trail into 2010...

Good luck...