" Rolling " an Options trade ..... " Roll " Out ? " Roll " up/down, Vertical Roll ??

So did Barry ever buy , just Regular Long Puts on Stocks BEFORE he shorted the Mortgage Backed Securities ?

And if he Bought Puts on stocks ..... What method did he use, to amass , such a huge Profit via his buying of outright Puts ?

Thanks
 
He probably did, but most profits came from MBS shorts. Have you actually seen the movie? At one point Burry has meetings with a few banks to discuss getting these short trades on MBS. They kinda laugh at him, and shrug shoulders and say... sure we can sell this to you. For such and such premium you can short it.. (basically options).

So his method is... seeing how it is... acknowledging the risk associated with MBS... determining the way to get the biggest exposure... trade on it.

Then he almost blows up, because when the market started to drop, the underlyings of his shorts/puts kept trading at levels as if nothing was wrong... which he questioned... but the banks looked after there own books, basically giving wrong prices for the MBS. Eventually the house of cards collapsed... and his 'puts' were massively ITM. I think he still had difficulties trading out of them.... he didn't get 100% value on them but only 80% or so...
 
JackRab ,
Thank you for explaining the method he used

I have not yet seen the Movie, but it is next up to watch via my Netflix account
 
md2324 said:
JackRab ,
Thank you for explaining the method he used

I have not yet seen the Movie, but it is next up to watch via my Netflix account
More...

It's great... loved it. Very realistic how small trading groups are portrayed. Baum's hedgefund/outfit is fun to watch, and how they deal with the DB banker... love it.

Actually, gonna watch it now!

ps. Rogue Trader is a great one too... bit old school, but fun.
 
Awesome, thank you I'll look that one up

Don;t forget Boiler Room ;)

Non-Trading movies, but yet really good ones:

1. Prisoners
2, The Revenant
3. Hacksaw Ridge
 
md2324 said:
Awesome, thank you I'll look that one up

Don;t forget Boiler Room ;)

Non-Trading movies, but yet really good ones:

1. Prisoners
2, The Revenant
3. Hacksaw Ridge
More...

Yeah boiler room was fun, but not really a trading movie... it's about brokers... kinda the same with Wall Street, mainly sell-side stuff (sales). I'm interested in buy-side.

Anyway, just an update on Big Short. Burry bought CDS's on MBS... Credit Default Swaps, which pay out when the underlying defaults. And they were based on marked-to-marked which uses daily settlement payments... kinda like pay-as-you-go.

So when the trade went against him he was paying the banks... which almost knocked him off his socks.
 
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