DEFINITION of 'Eurostrip'
A series of consecutive threemonth futures contracts based on U.S. dollardenominated deposits in foreign banks. Eurostrips, also called eurofutures strips or eurodollar futures strips, are a type of interestrate derivative and, like swaps, are used to hedge against changes in interest rates. A oneyear eurostrip would consist of four consecutive contracts, each lasting three months, that together have a duration of one year and thus provide an interestrate hedge for one year.
BREAKING DOWN 'Eurostrip'
The end result of hedging using eurostrips is the same as that of using swaps, but the two investments are traded differently and have different cash flows. One choice may be more desirable than another at a given time to meet a specific investment objective, or both may be even used together. Eurostrips are popular because of their flexibility to be structured in many different ways to meet a variety of hedging needs.

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