Bitcoin Forum
October 15, 2019, 10:37:52 PM *
News: If you like a topic and you see an orange "bump" link, click it. More info.
 
   Home   Help Search Login Register More  
Pages: [1]
  Print  
Author Topic: Hedge against rising interest rates  (Read 668 times)
domob
Legendary
*
Offline Offline

Activity: 1085
Merit: 1100


View Profile WWW
April 01, 2014, 06:30:13 PM
 #1

Are there (more or less "mainstream", so no prediction markets or things like that) financial instruments available that can be used to hedge against a rise in interest rates?  In other words, something which correlates positively with reference interest rates (of the ECB, for instance).  What can be used to achieve this?

I have absolutely no experience with these things yet ... but am sure someone here has.  A wild guess would be some leveraged bet on bonds.  But I'm not sure how strong they really correlate with the precise reference interest rate.

Use your Namecoin identity as OpenID: https://nameid.org/
Donations: 1domobKsPZ5cWk2kXssD8p8ES1qffGUCm | NMC: NCdomobcmcmVdxC5yxMitojQ4tvAtv99pY
BM-GtQnWM3vcdorfqpKXsmfHQ4rVYPG5pKS | GPG 0xA7330737
1571179072
Hero Member
*
Offline Offline

Posts: 1571179072

View Profile Personal Message (Offline)

Ignore
1571179072
Reply with quote  #2

1571179072
Report to moderator
1571179072
Hero Member
*
Offline Offline

Posts: 1571179072

View Profile Personal Message (Offline)

Ignore
1571179072
Reply with quote  #2

1571179072
Report to moderator
1571179072
Hero Member
*
Offline Offline

Posts: 1571179072

View Profile Personal Message (Offline)

Ignore
1571179072
Reply with quote  #2

1571179072
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1571179072
Hero Member
*
Offline Offline

Posts: 1571179072

View Profile Personal Message (Offline)

Ignore
1571179072
Reply with quote  #2

1571179072
Report to moderator
1571179072
Hero Member
*
Offline Offline

Posts: 1571179072

View Profile Personal Message (Offline)

Ignore
1571179072
Reply with quote  #2

1571179072
Report to moderator
odolvlobo
Legendary
*
Offline Offline

Activity: 2646
Merit: 1424



View Profile
April 01, 2014, 08:05:59 PM
 #2

There are interest rate futures and options: http://www.cmegroup.com/trading/interest-rates/

Buy stuff on Amazon at a discount with bitcoins or convert Amazon points to bitcoins: Purse.io
Join an anti-signature campaign: Click ignore on the members of signature campaigns.
5thStreetResearch
Full Member
***
Offline Offline

Activity: 126
Merit: 100


View Profile WWW
April 01, 2014, 08:25:19 PM
 #3

Futures, options, forward contracts.  There are lots of derivatives that allow you to hedge.  Some people consider gold or silver as a hedge here but it really isnt.  Stock market is booming, think its still got some legs to it, earnings season starting soon so we shall see.

twiifm
Hero Member
*****
Offline Offline

Activity: 784
Merit: 500



View Profile
April 01, 2014, 08:35:58 PM
 #4

Futures, options, forward contracts.  There are lots of derivatives that allow you to hedge.  Some people consider gold or silver as a hedge here but it really isnt.  Stock market is booming, think its still got some legs to it, earnings season starting soon so we shall see.

housing can be a hedge depending on location
domob
Legendary
*
Offline Offline

Activity: 1085
Merit: 1100


View Profile WWW
April 02, 2014, 05:27:31 AM
 #5

Futures, options, forward contracts.  There are lots of derivatives that allow you to hedge.  Some people consider gold or silver as a hedge here but it really isnt.  Stock market is booming, think its still got some legs to it, earnings season starting soon so we shall see.

Thanks for the hints!  Are these contracts 100% correlated to the interest rate (so that one can predict their market value when some particular interest rate is assumed), or just "most of the time positively correlated" (like gold/silver would be)?  My main interest is reducing risk related to interest rate changes for a loan I may want to take; so I don't really want to introduce even more uncertainty.

Use your Namecoin identity as OpenID: https://nameid.org/
Donations: 1domobKsPZ5cWk2kXssD8p8ES1qffGUCm | NMC: NCdomobcmcmVdxC5yxMitojQ4tvAtv99pY
BM-GtQnWM3vcdorfqpKXsmfHQ4rVYPG5pKS | GPG 0xA7330737
aminorex
Legendary
*
Offline Offline

Activity: 1582
Merit: 1029


Sine secretum non libertas


View Profile
April 02, 2014, 05:37:26 AM
 #6

At retail scale, you could make an option spread on fixed-income ETFs to get pretty much exactly the scale and amount of exposure you want.  It would be a diagonal spread which could be theta-positive, and you would roll it, minimum perhaps yearly, but quarterly is more workable.  European options are better than American.  Levering short would be a bad idea, because you'd be paying dividends.

Give a man a fish and he eats for a day.  Give a man a Poisson distribution and he eats at random times independent of one another, at a constant known rate.
ShakyhandsBTCer
Sr. Member
****
Offline Offline

Activity: 448
Merit: 250


It's Money 2.0| It’s gold for nerds | It's Bitcoin


View Profile
June 15, 2014, 12:07:32 AM
 #7

Are there (more or less "mainstream", so no prediction markets or things like that) financial instruments available that can be used to hedge against a rise in interest rates?  In other words, something which correlates positively with reference interest rates (of the ECB, for instance).  What can be used to achieve this?

I have absolutely no experience with these things yet ... but am sure someone here has.  A wild guess would be some leveraged bet on bonds.  But I'm not sure how strong they really correlate with the precise reference interest rate.

You can use TIPS (treasury inflation protected securities).

They are treasury bonds that pay a fixed interest rate plus an amount equal to inflation.

This would not be a perfect hedge against rising interest rates, but generally inflation and interest rates do rise and fall together, at least in the long term.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!