Euro Bund

What is a Euro Bund?

A Euro Bund is a futures contract issued by the German government. The English translation of ‘bund’ is ‘bond’. In the United States this is the equivalent of U.S. Treasury bonds.

Uses of a Euro Bund

A position in the Euro Bund is taken by investors as a form of hedging, using either an option or futures contract.

Risks of the Euro Bund

Taking a position either long or short will have the risk of the underlying banks. These banks will determine the rate which they lend to each other, effecting the rate at which the index will climb or fall.

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