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WDIS Futures: Fourth Generation

Interest Rates

WDIS Futures: Fourth Generation

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

Interest Rate Sheet

For this segment of WDIS Futures Generations, Chris and Pete have their first discussion on Interest Rates. More specifically they focus on the one of the most highly traded Futures product the Eurodollar.

The Eurodollar future is often confused with Euro Currency futures, when in fact they are entirely different products. Eurodollars are interest rate products; they represent the forecast for the 3-month interest rate given on 1 million US dollars deposited in overseas banks at some time in the future.

To determine the rate implied by the future we can just subtract 100 from the Futures price. One of the most important takeaways we conclude from the segment is that Yield and Price have an inverse relationship. When price increases yields decrease and vice-versa.

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