Dollar Index, Bonds Options

Discussion in 'Options' started by NPTrader, Apr 25, 2012.

  1. NPTrader

    NPTrader

    Hi All:

    Wondering if I could gather some opinions from this group. I'm seeking a good vehicle to trade options against the dollar index and treasuries.

    A few thoughts:
    1) TLT has great liquidity and tight spreads, but since it's an ETF there is unfavorable tax treatment. /ZN is the 10-year treasuries futures contract. It's options have good tax treatment and decent liquidity, but the ticks are so sizable that if you need to make an adjustment it costs you. Wondering if there are any other options?

    2) The dollar index. The only thing I have found is /DX. There is poor liquidity with only a few hundred options, and subsequently the spreads are not favorable.

    Thanks all.
     
  2. re the dx, try trading fxe (eur etf) - the spreads are tighter and volume is higher and eur makes up about half of the dx index anyways - not a true replacement but the best we're gonna get considering the alternative.
     
  3. The only other thing that's remotely related is Eurodollar options, which are more liquid than treasuries. However, the underlying is different, so take care.
     
  4. NPTrader

    NPTrader

    Thanks. FXE looks promising.