#termmax @TermMax
The more I look at TermMax, the less interested I am in whichever maturity is showing the highest rate.
I’m actually more curious about the ones people seem to ignore.
You’ll sometimes see capital naturally pile into one expiry while another sits there with much thinner liquidity. At first glance, the weird pricing on the quieter market can look like an opportunity. Maybe lenders are getting paid more for taking basically the same exposure.
But I’m not sure it’s that simple.
Sometimes a higher yield is just the market paying you to enter a position that might be annoying to get out of later. If you need liquidity before maturity and there aren’t many buyers on the other side, that extra return suddenly looks a lot less attractive.
That’s why I think looking at TermMax purely as “fixed yield” misses part of the picture.
The options side makes it even more interesting. You can start thinking about the position as a package: what rate am I locking in, what risk am I keeping, what can I hedge, and how much am I paying for that hedge?
Personally, I’d spend more time watching where liquidity isn’t going.
The popular maturities tell you where everyone feels comfortable.
The neglected ones are harder to read. Maybe the market sees risk there. Maybe the pricing just isn’t good enough. Or maybe nobody wants to be the first one in.
That difference is probably more useful than simply chasing the biggest APY on the screen.
#TermMax @TermMax
The more I look at TermMax, the less interested I am in whichever maturity is showing the highest rate.
I’m actually more curious about the ones people seem to ignore.
You’ll sometimes see capital naturally pile into one expiry while another sits there with much thinner liquidity. At first glance, the weird pricing on the quieter market can look like an opportunity. Maybe lenders are getting paid more for taking basically the same exposure.
But I’m not sure it’s that simple.
Sometimes a higher yield is just the market paying you to enter a position that might be annoying to get out of later. If you need liquidity before maturity and there aren’t many buyers on the other side, that extra return suddenly looks a lot less attractive.
That’s why I think looking at TermMax purely as “fixed yield” misses part of the picture.
The options side makes it even more interesting. You can start thinking about the position as a package: what rate am I locking in, what risk am I keeping, what can I hedge, and how much am I paying for that hedge?
Personally, I’d spend more time watching where liquidity isn’t going.
The popular maturities tell you where everyone feels comfortable.
The neglected ones are harder to read. Maybe the market sees risk there. Maybe the pricing just isn’t good enough. Or maybe nobody wants to be the first one in.
That difference is probably more useful than simply chasing the biggest APY on the screen.
#TermMax @TermMax