Rather, eurodollars are time deposits denominated in U. A time deposit is simply an interest-yielding bank deposit with a specified date of maturity. Since the time deposits are not inside U. Furthermore, since eurodollars are not subject to U.
Packs and Bundles Packs and Bundles provide convenient alternatives for executing strips of Eurodollar futures. Packs, like Eurodollar futures, are designated by a color code that corresponds to their position on the yield curve.
There are always 37 Packs listed for trading at a given time. Eurodollar Bundles allow you to simultaneously buy or sell consecutive euro dollar options of Eurodollar futures in equal proportions, typically beginning with the front quarterly contract.
As a result, large amounts of U.
Bundles and Packs are quoted in minimum. The liquidity of Eurodollar options offers traders and hedgers an opportunity to take advantage of their views on the direction of U.
Opportunities range from high gamma one-week options, to high vega options expiring up to four years in the future. 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. 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.
Because they are short-dated, Mid-Curve options offer a low premium, high time decay alternative in this segment of the yield curve. Weekly expirations on the 1-year, 2-year and 3-year Mid-Curve options are also listed, which allow you to take a view on upcoming economic releases and the effects upon U.