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Closing the Gap - Futures Edition

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Trading "Credit Quality" Divergence at the Short End

Closing the Gap - Futures Edition

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

On this episode of "Closing the Gap: Futures Edition," tastytrade examines the Yield Curve, paying particular attention to the short end.

Not only has the yield curve steepened fairly dramatically on the short end (in the TUF and TUT spread), but the "credit quality" curve has also experienced some movement.

While there aren't many products available to trade the credit quality curve, Pete explains that we can set up a trade here via Eurodollar Futures (/GE).

Tune in as Pete walks through the simplistic, liquid nature of /GE futures and how traders can compare /GE to /ZT futures. Then, get the proper ratio of this spread to capitalize on the credit quality difference.

2 Year Note Contract Specs
  • Symbol: /ZT
  • Contract Size:$200,000
  • Delta: 2000
  • Minimum Tick: .25 of 1/32 or 1/128
  • Tick Value: $15.625
  • Expiration: March, June, September, December
EURO $90 DAY Contract Specs
  • Symbol: /GE
  • Contract Size:$1,000,000
  • Delta: 25000
  • Minimum Tick: 0.005
  • Tick Value: $12.50
  • Expiration: March, June, September, December

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