Crude oil (CL) is one of the more active commodities to trade. It has tremendous volatility and excellent liquidity. Oil is affected by global economic and political conditions, almost to the same extent as US Treasuries. The price of crude oil affects the price of many other assets, including stocks, bonds, currencies and even other […]
Author Archives: Ernie Varitimos
The BoB spread is a type of yield curve spread, it depicts a spread between the very longest maturity treasuries, the 30-year Bond and the 30-year Ultra Bond. So, what’s the difference, and why is this such a good trading vehicle? Here’s the part of the yield curve that the BoB spread represents, indicated by […]
Spread or pairs trading is a very effective way to hedge your risk exposure to the movements of the broader market. With pairs trades you can make profits through simple and relatively low-risk positions. The trade is market-neutral, which means the direction of the overall market does not affect profit or loss…it’s the change in […]
There are many variations of the yield curve to trade, and it can be confusing which is the right one for your needs. So you may be wondering, which should I trade? The answer is relatively simple, if you understand your personal capacity and tolerance for risk, and whether you are a long-term or short-term trader. […]
In a previous post on Yield Curve Trading I list all the popular yield curve spreads that institutional and professional traders watch. The TUT spread is the 2-year over the 10-year Treasury futures spread. It’s a pairs trade that’s the difference between the notional values of the two contracts (cash value of the contracts). This spread […]
When we speak of hedging, what we’re really talking about is a pairs trade, where we go long one asset and short another. We hedge to take advantage of several key aspects of Treasury futures. The most important is the edge we get by eliminating the directional aspect of price (minimizes risk) and focusing instead […]
Yield Curve trading using futures has been the bread and butter of large institutions and professional traders for decades. This type of spread trading offers excellent returns and hedging opportunities in one of the most liquid markets in the world, US Treasuries. In our opinion, broader adoption to this type of trading into the retail […]
Statistical Arbitrage is a pairs or spread trading strategy, predominately used by hedge funds, investment banks, and professional traders. The strategy involves tracking the difference in notional value between two highly correlated instruments, like Silver and Gold futures, or the NoB spread, which is a trade between the 10 year and 30 year treasury futures […]