Eurodollar Futures Contract

[italkcash]

Hey anyone tried dealing Eurodollar futures through the Chicago mercantile exchange? I have not played much with US dollars abroad but sounds like an interesting future to work with as its determined by the market’s forecast for the delivery month. Anyone any experience?

[allangering]

If Eurodollar futures were being introduced today, they would probably be quoted with forward interest rates on the underlying deposits. Back in 1982, though, cash settled financial futures were a novelty. Trading was performed face-to-face in "trading pits" by traders who were more familiar with trading cattle or pork bellies. They thought in terms of prices instead of interest rates, so the exchange specified a formula for the "price" of a Eurodollar future in terms of its interest rate. This is the same formula the exchange had introduced for its t-bill future. If a trader wants to quote a Eurodollar future for some interest rate.