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All you need to know about trading Bund futures on the Eurex Exchange (Overview)

Last Updated on 10 February, 2024 by Rejaul Karim

Bund futures are a type of futures contract traded on the Eurex Exchange. They are based on the German 10-year government bond known as the “Bund” and are used to hedge against fluctuations in the price of the Bund. The contracts are available with maturities ranging from 2 to 30 years and are denominated in Euro.

Bund futures are popular among investors due to their liquidity and low transaction costs. They are also used by traders looking to take advantage of opportunities in the German bond market.

When trading Bund futures on the Eurex Exchange, investors must consider the size of the underlying contract, the tick size, and the margin requirements. The underlying contract size is €100,000 and the tick size is €2.50 for maturities of 10 years or less and €5 for maturities of more than 10 years. Margin requirements vary depending on the contract and can range from 2% to 8%.

In addition to these considerations, traders must also be aware of the settlement, expiration, and delivery rules. Bund futures settle daily, with contracts expiring at the end of the last trading day of the month. Delivery is not allowed, so all Bund futures are cash-settled.

The Eurex Exchange also offers a range of other products related to Bund futures, such as options and spreads. These can be used to further hedge against price movements of the Bund or to take on additional risk.

Overall, Bund futures are an attractive option for investors looking to hedge against fluctuations in the price of the German 10-year government bond. They offer low transaction costs, liquidity, and a range of other products to help manage risk.

FAQ

What are Bund Futures?

Bund futures are a type of futures contract traded on the Eurex Exchange, based on the German 10-year government bond known as the “Bund.” These contracts help investors hedge against fluctuations in the price of the Bund.

How are Bund Futures Priced and Traded?

Bund futures are priced in Euro and traded on the Eurex Exchange. The underlying contract size is €100,000, and tick sizes vary based on maturities.

What is the Tick Size for Bund Futures?

The tick size for Bund futures is €2.50 for maturities of 10 years or less and €5 for maturities of more than 10 years. Understanding the tick size is crucial for effective trading and risk management.

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