Nov
20
Thought of the Day, from Jeff Watson
November 20, 2012 |
I know of at least 3 suicides from the action of the 2007 WZ/MWZ spread which bankrupted an entire class of grain speculator. I haven't heard of any suicides from the gold/platinum spread action the past 16 months.
Richard Owen writes:
Some funds will only short through long put options because of the non-zero probability of totally wiping equity with a margin balance. And simply reduce gross when vol / time value erosion is too costly (ie., just be long, albeit less long). Is this excessive prudence or sensible? I would argue that for some portion of assets at least, it is sensible. Large players can have a bankruptcy remote portion of their assets that will short and make margin.
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