Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: Rummenigge
derivatives is driving the costs of the underlying goods or whatever is underlying.

You'll have to explain how that works. Last time I looked, the buyers and sellers of derivatives were in balance.

66 posted on 01/23/2008 8:38:46 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
[ Post Reply | Private Reply | To 65 | View Replies ]


To: Toddsterpatriot

And the emitting institutions ? Are making money - the faster the market the more.

And the hedge fonds - drive the market by having to buy after selling short - creating volatility thus driving the value of their options. (options are climbing on increased Alpha)

And if they are going long ? It’s getting to expensive to buy calls for the customers in real need for the underlying bean. So putting them on stock gets a cheaper alternative. Buying and selling increases with the hedge fonds in control of the cycles.

Volatility is expensive for those who have to buy a good.

Options are traded with high leverage and with borrowed money and with increasing speed - maybe it’s all meant to be symmetric but you can sell one side of the ballance and hold the other one and cover your debts from yesterday with the turn over of today because the derivative market is convex.

I have not understood all the details - but it all looks like a giant chain mail. (they are better the more complicated they are)


67 posted on 01/23/2008 9:11:57 AM PST by Rummenigge (there are people willing to blow out the light because it casts a shadow)
[ Post Reply | Private Reply | To 66 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson