Jump to content

Trading SONIA contracts


Recommended Posts

Hi all,

I am sure like many of you, I am interested in trading some of the short-dated SONIA contracts (probably June) to express a view on the BoE given looming rate cuts and Bailey's dovish turn! However, I have noticed that the margin requirements are really high for the SONIA contracts? Something like £900 for the minimum size (0.5 per point)? To me, this doesn't make a lot of sense given the likely volatility in the series (and profit / loss up for grabs).

By my calculations, the realistic best case scenario is that the Bank of England cuts rates in May and then June, meaning that the June contract moves to 9525. That means I make only about £9? Equally, worst case is that Bank rate stays unchanged at 5.25%, meaning a loss of only £16... So I am just struggling to understand why the margin requirement is so high in proportion (c£900). Thus, if my thinking is correct, is it a more efficient allocation of capital efficient to choose a different expression to express BoE rate views? E.g. a gilts etf or even GBP.

Link to comment
  • 2 weeks later...

Margin requirements for SONIA contracts may indeed seem high due to their significant size coupled with the expected market volatility. Given possible changes in Bank of England rates, it is worth weighing the risks and possible potential losses. It may be worth considering alternative ways of expressing your views on betting policy, such as ETFs or GBP trading.

  • Thanks 1
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • While established players like Binance held steady market share, Bitget has shown impressive growth in Q1 2024. Their derivatives market share jumped from 9% to 12% in just two months, pushing them to the number 3 spot, surpassing OKX. This surge coincides with a significant increase in their user base, reaching 25 million.   The exchanges’ growth isn’t limited to market share. Their spot trading volume also saw explosive increases throughout the quarter, culminating in March’s staggering $95 billion. This impressive performance has seen Bitget overtake several competitors, solidifying their position as a leading exchange for both experienced and new crypto traders.
    • SOL is on the move! Keep your eyes peeled as it approaches key resistance at $148.27. Further ceilings await at $148.98 and $151.86. However, a breakthrough could signal a stronger bullish phase.   Support levels stand firm at $141.17, with even stronger foundations at $133.73 and $128.71. These are critical in case of any selling pressure, offering potential buying opportunities on dips.   Feeling bullish? Traders might consider long entries on pullbacks to major support levels, with stop-loss orders placed below $133.73 to manage risk. If SOL struggles, short positions could be in play with targets set at subsequent support levels.
    • In last couple of years, there has been  debate over the top memecoin investment with centre of discussion around DOGE, SHIB, FLOKI, PEPE and a host of others. Personally, I feel comparing any contender to DOGE feels akin to comparing altcoins to BTC. DOGE, being the pioneer memecoin, boasts an impressive $22 billion market cap, towering over its closest competitor, SHIB, with a $13 billion market cap. Its unique endorsement by Elon Musk further solidifies its position. The fervent backing from its vast online and offline community serves as a blueprint for other memecoins to follow. Thus, it's no surprise that DOGE emerged victorious in a recent Bitget poll, where enthusiasts competed to showcase their community's strength in honor of DOGE DAY 2024. With DOGE predictably clinching the win, ten fortunate participants stand to each receive $300 worth of DOGE through the event's gleam completion. Let's seize this opportunity to bolster our crypto portfolios.
×
×
  • Create New...
us