JPM desperate to defend losing position on CDIs

sle · May 11, 2012

Quote from stock777:

what happened top that fat guy who sold thinkorswim who has been short bonds and long finnies for so long?

I would imagine he's not so fat anymore...

pikerforlife · May 11, 2012

trying this again, my 'first post' never showed up.

earlier, as news was breaking, bloomberg was showing a ticker saying something about >$1B of the potential loses being tied to volatility. anyone know how this would work with the instruments involved? i'm assuming higher vol. = quickening/steepening loses, but i'm sure it's not as simple as this.

would the other side of this london whale's trades know what levels of vol. might cause him to break?

thanks

--pfl

stock777 · May 11, 2012

these French aint that dumb, they prob took the other side of the trade in another account.

see ya on the Riviera!

atticus · May 11, 2012

I am hearing that they stood to earn only $300-$330MM in yearly premium from the swaps. Nice call Drew, Dimon and Co.

Banjo · May 11, 2012

You are right then, a degenerate gambler. WTF puts a risk profile like that on.

CoolTraderDude · May 11, 2012

Quote from Banjo:

You are right then, a degenerate gambler. WTF puts a risk profile like that on.

Iksil may have amassed a $100 billion position in contracts on Series 9 of the Markit CDX North America Investment Grade Index, counterparts at hedge funds and rival banks said in April. They based their estimates on the trades and price movements they witnessed as well as their understanding of the size and structure of the markets. The positions amounted to tens of billions of dollars, under the firmâs own math, a person familiar with its view said at the time.

The trade on the index probably wasnât a one-way bet, the market participants said. Iksil may have offset it by buying protection on the same index with contracts that expire about seven months from now, the people said. That strategy would pay JPMorgan the difference between the long-dated contracts and the short-dated ones, and the trade would gain when the gap narrows. The hedge would end in December unless another trade is made to replace it.

http://www.bloomberg.com/news/2012-05-11/jpmorgan-loses-2-billion-as-mistakes-trounce-hedges.html

I think JPM will get out of it OK...

atticus · May 11, 2012

Didn't know of Drew's position in CDI? Which is worse, ignorance or incompetence? Almost as bad at O'Neill and Purcell.

Crispy · May 11, 2012

Quote from atticus:

I am hearing that they stood to earn only $300-$330MM in yearly premium from the swaps. Nice call Drew, Dimon and Co.

Risk reward and hedge have no definition in Dimon land.

If they are putting a 2-3bn number on this thing you know its like 13-20.

Hearing they were 25-50% of the mkt...so whats the notional on that? LOL....

How you say, SMOKED?!?!

Crispy · May 11, 2012

Quote from CoolTraderDude:

I think JPM will get out of it OK...

They will survive but by the end of it you wont recognize them.

atticus · May 11, 2012

Quote from Crispy:

Risk reward and hedge have no definition in Dimon land.

If they are putting a 2-3bn number on this thing you know its like 13-20.

Hearing they were 25-50% of the mkt...so whats the notional on that? LOL....

How you say, SMOKED?!?!

Yeah, if they had reported a $300MM gain you can be assured there would be no mention of ROC, just how incredibly fcuking smart they were. Dimon Principle. Tool.