Has anyone traded these? Are they accessible to retail?
Credit default swaps
- Thread starter ferrycorsten
- Start date
A bank's structured desk probably won't take calls from an individual unless you are Warren Buffet. Even if you were, you would have a team of brilliant guys conspiring to rob you.
The CME has been trying to get a sliver of the market for over a two decades by offering itself as a clearinghouse to remove counterparty risk. I think you have to be backed by an Investment Bank for this.
http://www.cmegroup.com/trading/cme-direct/
The CME has been trying to get a sliver of the market for over a two decades by offering itself as a clearinghouse to remove counterparty risk. I think you have to be backed by an Investment Bank for this.
http://www.cmegroup.com/trading/cme-direct/
The problem with mega-mogul people is that they are the "private banks to these banks" : example Warren Buffet lending money to Goldman Sachs during the crisis. So I wonder who will "robbing who".
That's a good find. But, I think the product is getting re-worked. Banks are hesitant to support the exchange OTC products. Transparency = lower product margins. Regulators should strong arm them into using exchange clearing facilities.
http://www.bloomberg.com/news/2014-...-of-credit-swap-futures-that-mimic-index.html
Short HYG or buy puts on it.
High yield bonds are highly correlated to equities. Investor could also have reduced or short exposure to SPY or IWM, instead of CDS
I have generally stayed away from High Yield investing because it fuzzies my allocations.
However, I have recently seen hedge fund industry reports of High Yield and Convt Arb to produce Sharpe ratios of 4.0-6.0. Obviously, their edge is from 144A Private Placements. Or maybe, holdings that are valued a little bit more conservatively than mtm?..Not sure.
Still, it would be a nice place to lever up a trading strategy if you can even produce 1/2 to 1/3 that Sharpe. The tight yield spreads look really scary though.
However, I have recently seen hedge fund industry reports of High Yield and Convt Arb to produce Sharpe ratios of 4.0-6.0. Obviously, their edge is from 144A Private Placements. Or maybe, holdings that are valued a little bit more conservatively than mtm?..Not sure.
Still, it would be a nice place to lever up a trading strategy if you can even produce 1/2 to 1/3 that Sharpe. The tight yield spreads look really scary though.