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Paul--
I read the same issue. It seemed the TED Spread worked best during a period
of rising interest rates and overall volatility. A war would probably
increase volatility but it is hard to see interest rates spiking. I'll read
it again.
The posts on Iraq plays are very interesting.
bob nelson
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> From: Paul Cote <cote@xxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: How to capitalize on a war--TED SPREAD
> Date: Friday, February 20, 1998 1:45 AM
>
> As a former subscriber to the Hume Supertrader's Almanac, I remember
> that there was an issue on the TED SPREAD. The Ted Spread is a Long T
> BILL and Short Eurodollar spread. It is based on the fact that T Bills
> always have less risk than Eurodollars. When the spread gets thin, one
> buys the spread in hopes it will widen and a profit will be earned,
> earned by the Eurodollar going down in relation to the T Bill. During a
> War scenario, the overnight risk in US Dollars held in overseas european
> banks rises, and the Eurodollar should go down to reflect this. I don't
> know if this will work for a new gulf war and have not looked at what
> the TED SPREAD did in the last war. Any comments greatly appreciated.
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