Announcement

Collapse
No announcement yet.

Trading Pit History: Birth of the Eurodollar contract

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Trading Pit History: Birth of the Eurodollar contract

    Eurodollar futures contract open 1981

    February 12, 2019Opening day of eurodollar futures trading at the Chicago Mercantile Exchange on December 9, 1981
    The eurodollar futures contract is over 37 years old and having traded it for about half it’s (and my own) lifetime thus far, I was quite pleased to obtain this roll of film which documented the opening trading day of the contract at the Chicago Mercantile Exchange on December 9, 1981. There’s an issue embedding the file so click this link HERE to see the entire film roll of photos which will open up the uploaded 41MB pdf file.
    Eurodollar opening day photos 1981Download
    When the LIBOR based contract was launched, the interest rate was over 13% which is pretty much unthinkable now considering the current environment of zero or negative rates across the globe. Not only is the volatility unimaginable with 13% interest rates but I can only think that the bid ask spreads were wide enough to drive a truck through in that trading era. Meanwhile as I write this, the size in front month eurodollars is 70k x 100k (including a single order of 30k on the offer). Another stat I can throw out there is according to my historical data, eurodollars had about 3.5 million open interest when I started as a clerk for some local traders there in 2000 and that ballooned to over 17 million a year ago but is down to about 12.5 million currently.

    This FRED chart shows the LIBOR rate going back to the 1970s and illustrates the downward trend in rates since the day pictured, with a lot of credit due to the eurodollar contract and other financial futures, which presented hedging opportunities and reduced uncertainty to the capital markets.

    One of the things I found funny was that when I went into the eurodollar pit as a 22 year old to trade, there were a lot of old guys who are pictured in some of these photos as young guys. A small amount of people are also pictured wearing the pinback button which was given out to commemorate the contract launch. Pictured below is one that I have in my collection: Eurodollar futures contract launch button on December 9, 1981 from Chicago Mercantile Exchange

Disclaimer: There is a risk of loss in trading futures, forex and options. Futures, forex and options trading are not appropriate for all investors. Only risk capital should be used when trading futures. All information is for educational use only and is not investment advice. Past performance is not indicative of future results.

This website is hosted and operated by AMP Global Clearing, LLC ("AMP"), which provides brokerage services to traders of futures and foreign exchange products. This website is intended for customer support, educational and informational purposes only and should NOT be viewed as a solicitation or recommendation of any product, service or trading strategy. No offer or solicitation to buy or sell derivative or futures products of any kind, or any type of trading or investment advice, recommendation or strategy, is made, given, or in any manner endorsed by AMP and the information made available on this Web site is NOT an offer or solicitation of any kind. The content and opinions expressed on this website are those of the authors and do not necessarily reflect the official policy or position of AMP.

All Users and Contributors along with their websites, products and services, are independent persons or companies that are in no manner affiliated with AMP. AMP is not responsible for, do not approve, recommend or endorse any User and/or Contributor Content referenced on this website and it’s your sole responsibility to evaluate All Content. Please be aware that any performance information provided by a user and/or contributor should be considered hypothetical.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

AMP has NOT endorsed or recommended the use any product, services offered by any 3rd party User or Contributor on this forum. No person employed by, or associated with, AMP is authorized to provide any information about any 3rd party User or Contributor content. All specific brokerage related questions should be directed towards AMP.

Copyright © 2017. All rights reserved.

Working...
X