Futures Measures

How To Place Yield Curve Steepener Trade

Futures Measures

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

Learn how to trade the twos over tens spread when you think the yield curve will steepen, and also learn how to place the trade if you have a smaller account or are just starting out trading the yield curve. If you want a refresher on the TUT spread, check out this segment from last week.

How To Place Yield Curve Steepener Trade

To place a yield curve steepener trade, you will be buying the TUT spread. This means that you will buy the front leg future and sell the back leg future.

The resulting trade does not consume that much buying power (in this specific example, around $2000) however, if you have a smaller account or are just starting out trading the yield curve, there is another trade you can make using options on futures.

An example of this would be to buy two 2-year note calls and sell the 10-year note call spread. We do this for a debit, with the hopes that the yield curve will steepen.

Strategies: TUT Spread (Twos Over Tens Spread) - with Futures and Options on Futures
Products Discussed In This Episode: /ZT, /ZN

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