Uh, I’m having some difficulty determining just how credible the information in this post from Barhnhardt really is. For one thing, I find it highly unlikely that these options market making firms would have dabbled heavily into Euro Debt; if anyone was going to take a position in those, it would have been to short the instruments. There’s a vague reference on the Examiner to a Wall Street Journal report about dollar market lockup, but I’ve not been able to find it.
My neighbor who would know the answer to that moved back to Hungary.
The size of the position is not the issue as much as it is the extent of the leverage - unwinding by one firm subject to a call causes the cascade.