1. Short-term interest rate futures:
Short-term interest rate futures are usually based on the three-month London Interbank Offered Rate (LIBOR), such as the euro-dollar futures contract of Chicago Mercantile Exchange (CME). The purpose of these futures contracts is to lock the interest rate on a specific date in the future to avoid the risk of interest rate fluctuations.
2. Long-term interest rate futures:
Long-term interest rate futures are usually based on the interest rate of 10 or 30-year government bonds. For example, the Chicago Board of Trade (CBOT) 10-year treasury bond futures contract. These futures contracts are used to manage long-term interest rate risks, such as fixed-rate bonds or mortgages.
3. Yield curve futures:
Yield curve futures are interest rate futures based on yield curve. The yield curve reflects the interest rate level in different periods and is usually used to evaluate the overall interest rate risk in financial markets. The yield curve futures can provide protection for the morphological changes of the yield curve, such as the 10 and 2-year bond yield curve futures contracts of the Chicago Board of Trade (CBOT).
4. Swap futures:
Swap futures are interest rate futures based on interest rate swap contracts. Interest rate swap is a kind of financial contract, which is used for cash flow exchange between fixed interest rate and floating interest rate. Swap futures can guard against the risk of interest rate swap contracts, such as CBOT's three-month euro interest rate swap futures contract.
5. Interest rate ceiling and floor options:
Interest rate ceiling and floor options are interest rate futures based on interest rate ceiling or floor options. These options give the holder the right to trade at a specific interest rate for a specific period of time. For example, if the interest rate rises above a certain level, the holder of the interest rate ceiling option can exercise the option to lock in a higher interest rate.
It should be noted that interest rate futures trading involves high risks, and investors need to fully understand its potential risks and income characteristics when trading interest rate futures.