Eurodollar Futures

Eurodollar Futures

1. What ?

   • A Eurodollar is a dollar deposited in a bank outside the United States
   • Eurodollar futures are futures on the 3-month Eurodollar deposit rate (same as 3-month LIBOR rate)
   • One contract is on the rate earned on $1 million
   • A change of one basis point or 0.01 in a Eurodollar futures quote corresponds to a contract price change of $25
   • A Eurodollar futures contract is settled in cash
   • When it expires (on the third Wednesday of the delivery month) the final settlement price is 100 minus the actual three month deposit rate

2. How ?

3. Why ?

   • to hedge exposure for the company
   • to gain or loss when interest rate increase or decrease

Bilder und Dateien der Mindmap