Can a lot of money be made trading fed fund futures? I'd like to learn more about this contract - any good places to start? I'd like to take the other side of a 100 basis point cut by March 08 expectation.
well certainly a lot of money can be lost if you use common sense and the markets behave like they did recently. start on cbot website - you should find there everything. if you like it depends partly on your nature - you can achieve almost the same results with trading eurodollars (1 FF = 5/3 ED). fed funds are just a little bit cleaner (no credit risk) when you want to trade (and time) macroeconomic decisions. The volatility is about the same as ED - the liquidity is much much worse. usually only the first 2 coming meetings can be easily traded. however when the fed becomes fashionable (like nowadays - you notice it by number of threads on ET) you can trade out to 6 month forward with reasonable bid/offers - still very poor in comparison to ED.
No cut. 25 bps max. Just listen to Hank Paulson. http://www.nasdaq.com/aspxcontent/N...\ACQRTT200709121646RTTRADERUSEQUITY_1062.htm&
good point - i was thinking about it too especially given that he has a breakfast with ben every week and it seems they are on good terms. the only drawback is that Paulson is not sitting on FOMC...
How they can cut rates with crude oil making all time highs is simply irresponsible. IMO oil may spoil this little rate cut.