No. of Recommendations: 5
One traditional way to play the TED spread is to play the spread itself with futures, rather than using it as a signal for equities.

In short, bet that the spread will widen.
Most of the time this roughly breaks even, because most of the time the spread doesn't widen.
If a panic comes, you make out like a bandit as the spread blows out.

This is a very old trade. I did it first in the 1980s.
This is the book from back then that told me why and how and a suggested "when" https://www.amazon.com/TED-Spread-Superinvestor-Files/dp/B00...
(with handy tips on which column of the newspaper you get the quotes from!)
Apparently I'm not the only one who read that. Worth a read if you're tempted.
https://groups.google.com/forum/#!msg/misc.invest.futures/Th...

These days most people with a similar outlook go long volatility, but the TED spread is an
interesting tool if it's specifically a panic of a monetary flavour about which you're concerned.

Jim
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