Comment on Basics - Trading Interest rate futures

Nithin Kamath commented on 25 Jan 2014, 06:11 AM

Priya,

The 883 contracts are quite liquid, and the volumes should pick up as the product gets popular, it is just the 1st week of trading. Spread positions are very similar to calendar spreads on any other product, when you expect the difference between 2 different month contract of same underlying to reduce, you buy the lower price and short the higher price. Once the difference comes down, you take an opposite position to make profit. Since such a position is completely hedged the margin blocked by the exchange is also quite less, in the case of IRF it is Rs 800 against the more than Rs 6000 if you took a naked position.

Cheers,

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