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January 26, 2022

 Still Shorting Eurodollars

 

In anticipation of some sort of rally ahead of today’s Fed meeting, last week we exited the majority of our long held Eurodollar puts, many of which were deep-in-the-money. The market did rally a bit, and this morning we used that rally to begin reinstating our positions, moving primarily into the September contract (most of our previous puts were in June).

I continue to believe the Fed is WAY behind the curve…and the longer they are…the more aggressive their raises will have to be…whenever they DO finally get started.

I CONTINUE TO RECOMMEND BUYING PUTS…I BELIEVE NEW LOWS IN EURODOLLARS THIS AFTERNOON IS SIGNALING ANOTHER STRONG LEG LOWER THAT MAY TAKE THE MARKET DOWN ANOTHER 40-50 POINTS BEFORE THE FED DOES ACTUALLY MAKE THEIR FIRST RATE INCREASE…WHICH I AM NOW THINKING WILL ALMOST HAVE TO BE AT LEAST 1/2%.

As always, I need to point out that this is NOT the Eurocurrency, nor does it refer to Europe…Eurodollars are Dollars on deposit anywhere outside the United States…and the Eurodollar Rate, which is identical to LIBOR (London Interbank Offered Rate), is the interest rate pertaining to borrowing or lending those Dollars…More simply stated, the Eurodollar contract exactly reflects LIBOR, which is the generally recognized as THE international benchmark for short term loans… And when short term interest rates are going higher, this is reflected by the Eurodollar Futures contract going lower.


 

Here is one option I would recommend here…

Call me if you’re interested in doing something with this…Or want to comment…or just say hello.

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars

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