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You're correct... Assuming you care only about your PNL at expiry, there are no significant risks to being short options, other than the risk of losing money due to the movements of the underlying. There is one thing to be aware of, although it's not very likely to occur for a liquid...

How much stock are you planning to buy at 590, in proportion to the size of your short option position?

It's a good lesson to learn, indeed. I am used now to watching these things like a hawk, no matter how trivial the position. It's always good for a few tense minutes. I remember once LIFFE refused to tell my clearer whether I was assigned on the short leg for about an hour during quite a...

It's tax day, mbs p&i day, as well as net settlement of arnd 35 yards of various treasury collateral. Should be down to arnd 20 again today.

Achilles, with all due respect, I don't think you comprehend fully what the crisis was all about. I know that you think you can look at the numbers and say that "there's always a bottom". And yes, I agree, there IS always a bottom, but it's all about what sort of bottom it is. After all, the...

Yes, it's only human...

No

What about Singapore's Q1 2010 GDP of 13.1% YoY. What's going on there? Is that command and control sorta thing too?

No more taramasalata? No hummus with your pita?

It says exactly the following... Please feel free to correct me if mis-state anything here. There's a guy in the video talking to another guy on the phone. The second guy claims that he's in Copenhagen and is unable to convert some wee amount of dollars into, I assume, Danish Krone. That's...

To my knowledge, there is no such mechanism in place. Thus the outcome of such a currency crisis is not well defined. My guess is that it would depend on what sorts of assets are held by each individual bank against the EUR-denominated deposits. For instance, if, god forbid, your EUR...

Methinks I detect a wee bit of sarcasm here... Do they accept USD everywhere in Belgium these days, Debaser? 'Cause if they don't, it's truly the end of the world.

Yes, this was known when the package was put together. However, various national spokespeople have been coming in, one by one, suggesting that they're confident their parliaments will approve. Today it's the Dutch finance minister. Ministers in France, Ireland, Italy and Spain have already...

It would be a good idea, wouldn't it? Problem is that there's no incentive for anyone to create it and it's a pain in the arse, 'cause you have to be short bonds. So there isn't one, to my knowledge...

I am not suggesting your numbers are bad, achilles... By "counterfactual" I mean that your numbers are based on losses encountered by the system with the various govt backstops, programs etc. You don't have a good way of knowing what these losses would have been without govt intervention.

Misthos, I am referring to recent history, rather than the 70s... Also, after reading some more, it appears I am not entirely correct either. In 2008 Ecuador seems to have gone through a proper "hard" default. And yes, if an involuntary restructuring isn't a default, I don't know what is.

Yep, I second that... Sinclair's books (including the new one that's not out yet) contain a discussion of the commonly used methods, including Whalley&Wilmott and Zakamouline.

You need to do what's called a "breakeven inflation" trade. If you want to sell breakeven inflation, you'd sell TIPS vs buying the closest maturity conventional bond (weights are determined in such a way as to make you net flat outright rates). Breakeven inflation or "bei" is the yield of the...

Sovereign defaults haven't been proper defaults since Argentina in 2001. A sovereign these days doesn't default, it engages in what's referred to as a "pre-default restructuring". This normally means an exchange offer (i.e. exchange old bonds for new bonds), either voluntary or not. The...

Should be this one, I think, although have no idea how to find it in IB: http://www.google.com/finance?q=NYSE:TIP As long as you realize that by selling a TIPS you don't go short inflation, you go short real yields.