Re: Fed Rate Cut Discussion Thread
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Barron,
I agree the value here is in betting that the fed will hold rates steady. Where can retail investors make that kind of bet? Obviously there are indirect plays like shorting firms like GS and JPM, but how do I do it directly?
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fed funds futures market (i don't know notional but i'm pretty sure it is like $50k or $100k w/ maybe a 10% overall margin at interactivebrokers.com)
and options on fed funds futures.
fed funds futures are quoted similar to eurodollar contracts and the current price of sept. fed funds futures is something like 95.08 (i may have mentioned this earlier). so if you think that is incorrect, and you think it should be 94.75 (a rate of 5.25%), you would go short the futures contact.
similarly, you could buy a put on the contract at 95.00 maturing in september.
Barron
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