The $1 Billion Armageddon Trade Placed Against the United States

[mercurial]

I wonder how many politicians have interest/investments in private funds holding CDS against the US?

 

[Illum]

Wow, what garbage reporting. They have zero clue about futs. Money Morning "news you can profit from" My ass. Only paulson can trade 5000 lot? This is what happens when itt grads get together and open a website.

 

[shortie]

Just remember that ZeroHedge is Long SPY Aug Puts

 

[Algo_Design_Kid]

Quote from shortie:

Just remember that ZeroHedge is Long SPY Aug Puts

So buy calls?

 

[Random.Capital]

Of course, Reagan was the champ, with 18 debt ceiling hikes during his administration.

"I sounded off and told them I'd veto every d--n thing they sent down unless they gave us a clean debt ceiling bill."

Hell, that's basically a restatement of Obama's position...

 

[Illum]

The trade may be a good one, same with zerohedgers. But this article is fubar about the size of the trade. They don't seem to understand derivatives and are drooling over the size in amazement.

 

[Mercor]

Quote from EON Kid:



However, with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.

Initial margin is about 25 million dollars. that will cover about a 3 point move.
To lose $1 billion on this trade bonds would need to rally over 100 points
The media always embellishes the risk of futures.

 

[Martinghoul]

Stupid stupid article.

 

[CrackPipe]

Im always amazed at how patriotism (an emotion) rules over common sense and fact among American traders.

These are the facts:

- over 50% of US debt is held overseas.
- the majority of this debt is held by Chinese
- the USA is already technically bankrupt
- although a small income tax increase will ease the situation, the american public will never want to pay more tax in the short term, even to escape the turmoil of what we see happening in Europe.
- interest rates cant go any lower, they can only go one way from here. What will that do to yields.....?......

To my thinking, this trade is a no-brainer.

The telling thing is the timing of the trade, and the way it was executed, not the fact it occurred.

Get a bucket! Some of you are gunna be sick......

 

[trade2live]

This can be simple hedging by a bond fund