After multiple inquiries, I thought that I’d pull together my responses of FAQs related to “how do I trade CME housing futures” into one blog (that I will update over time). If anyone has ideas that would improve this list, please feel free to contact me (firstname.lastname@example.org).
Understanding Reference Obligations: … Read More
The graph below may be the best way of illustrating several points that are key to understanding home price futures, as well as the current debate over home price expectations:
- All home price indices (including Case Shiller) measure events that have taken place a couple of months ago. Since traders
… Read More
My recap of activity during November in the CME Case Shiller home price index contracts can be found in the Reports section, or accessed here.
The key notes for the month include:
–There were 11 futures contracts traded in November, across 4 expirations, and 3 regions.
–Activity (bids/offers/trades) remained higher … Read More
A number of fractional interest (“FI”)/ shared appreciation programs/ have been gathering steam (and funding) based on the assumptions of modest home price gains, paired with leverage (in the form of a homeowner’s mortgage). The back-of-a napkin illustration is that should a home with an 80 LTV rise in price … Read More
This morning’s monthly release of Case Shiller indices has been followed with a modest (net) mark-down of quotes on the CME home price index futures. As highlighted in the table below, index values tended to be lower than mid-market level on the expiring Nov ’18 (X18) contract. For example, the … Read More
The Nov 2018 (X18) contracts will stop trading on Monday Nov. 26th at 3 PM EST (note – one hour before other contracts) after a 5-year run. There is open interest of 18 contracts across 7 regions, so some traders may want to close out positions, or extend hedges, before … Read More
I’ve updated two-sided CME quotes for puts on 11 regions, for Nov 2019 expiration (x19 contract), at strikes near spot levels. The table is shown below and is in the Options tab.
There’s been no volume and near no open interest, so this is as much price discovery as it … Read More
Someone looking to hedge home price index exposure might find one of the ten regional contracts listed on the CME (plus one for the 10-city index) useful, but what if you’re looking to gain exposure (long or short) to another area? There are another ten, public regional indices (that with … Read More
The DC press has been all abuzz about the prospects of Amazon picking the DC/ Northern Virginia area as the site of their HQ2 and the potential impact on home prices in the region. However, speculation on how to play the real estate market in the run-up to the anticipated … Read More
I’ve posted a recap of activity in the CME Case Shiller home price index contracts for October. The recap is in the Reports tab or you can access here.
Highlights of recap include:
–There were 22 futures contracts traded in October, across 6 expirations, and 3 regions. Trading, and … Read More