Why does a long Eurodollar futures contract make money as interest rates decrease?
I don’t get this either. It seems that going long the contract means you are borrowing funds. Does anyone know if this is unique to Eurodollar contracts?
I thought I recall the short making money when interest rates go down.
Eurodollar future contracts use discount rates. When r decrease its value increase.
Ok, Thanks Gebura
If you bought an eurodollar future at $90 (i.e. LIBOR 10%), and that later on, the LIBOR decreases to 8%, your eurodollar future is worth $92, and you get paid on your margin account.