What is Eurodollar option?

What is Eurodollar option?

Eurodollar options provide the ability to limit losses while maintaining the possibility of profiting from favorable changes in the futures prices. All Eurodollar options are American-style, meaning that the options may be exercised on or before expiration.

What is Eurodollar future?

A Eurodollar future is a cash settled futures contract whose price moves in response to the LIBOR interest rate. Eurodollar futures are a way for companies and banks to lock in an interest rate today, for money they intend to borrow or lend in the future.

How are Eurodollar futures settled?

Eurodollar futures however, are cash-settled. Buyers and sellers of Eurodollar futures contracts that hold their contracts through final settlement will be credited the difference, in cash, between what they paid for the contract and what they sold the contract at, if there is a profit.

What are Midcurve options?

Mid-Curve options are short-dated American-style options on deferred Eurodollar futures contracts, one, two, three, four and five years from the options expiration date. These options give the ability to trade options expiring at the same time on different parts of the curve.

When was the euro dollar created?

January 1, 1999
The new currency, the euro, was officially issued on January 1, 1999. Although its use was initially limited to financial markets and certain businesses, participating member states began using euro currency notes and coins in 2002.

Is eurodollar the same as Libor?

LIBOR is a benchmark for short-term interest rates at which banks can borrow funds in the London interbank market. Eurodollar futures are a LIBOR-based derivative, reflecting the London Interbank Offered Rate for a 3-month $1 million offshore deposit.

What time do European futures open?

Europe opens at 03:00 and trades until 09:30 ET. Since the S&P 500, Dow 30, and NASDAQ 100 “belong” to the US, the US takes over at 09:30. However, Europe is still open and trading for the first 2 hours of the US market; so during the morning session of the US markets there is still European influence.

What is the difference between a dollar and a Eurodollar?

A Eurodollar and a euro are not the same thing. Eurodollar is a term that refers to any United States dollar (“U.S. dollar”) held outside the U.S. banking system. In other words, there can be Eurodollars in the UK, the UAE, Brazil, Burundi, etc.

How much is a Eurodollar worth?

Eurodollar futures contract specifications

Exchange Chicago Mercantile Exchange, ED
Contract Size $1 million ($1,000,000)
Minimum Tick Size and Value 0.0025, worth $6.25 in the expiring front-month contract, and 0.005 worth $12.50 in all forty quarterly expirations.


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