Options Trading : Myths and Realities

Options trading bukan untuk semua orang. Vic Sperandeo mungkin sangat sukses di tahun 1978-1989. Tapi, setelah itu, kinerjanya tidak se spektakuler periode tersebut. Walaupun demikian, Victor termasuk salah satu investor berskala besar yang sukes. Tidak ada salahnya bagi kita untuk melihat pandangan dia (dan Dr. Sjuggerud) mengenai options trading.

Options Trading with Vic Sperandeo: Myths and Realities
By Dr. Steve Sjuggerud, President, Investment U

Options trading pro Vic Sperandeo made 70.7% a year without a losing year from 1978 to 1989. So it is possible to make an extraordinary amount of money trading options.

However, even though Sperandeo managed big gains, most people lose money trading options. The difference between winning and losing in options trading comes down to a few basic principles. Today we’ll examine a few of those principles… and we’ll identify a handful of risks you should always consider when trading options. Continue reading

CDO, CDS, Sub-Prime

Artikel menarik mengenai CDO, CDS.

“Well, What Do You Want It To Be?”

Today I will follow a debt trail, from loan origination all the way to its ultimate existence as part of a credit derivative product. I will use a sup-prime mortgage loan as an example, but any debt obligation will do. Keep the question of the title in mind, it will make sense in the end.

Let’s start two years ago with Ron and Ronda White, a couple in their early 30’s with a combined income of $60.000 who have their eyes set on a $300.000 house to call home. They have saved only $5.000 to put down, which barely covers the closing costs. Their mortgage broker talks them into a $250.000 first mortgage ARM with an initial 2-year teaser rate of 2% rising to prime+1% thereafter and a $50.000 second, 30-year fixed at a whopping 10.5%. Despite the obvious problems apparent right from the start, such loans were made to hundreds of thousands of people. But no matter…

The two loans were immediately sold to investment bank XYZ who pooled them with other loans (creating Residential Mortgage Backed Security, or RMBS) and placed them inside a CDO. Using recent default data, the financial engineer employed by XYZ took 90% of the White’s outstanding mortgage amount and placed it in CDO Tranch A, the supposedly safest portion rated AAA and paying 0.10% more than other AAA straight corporate bonds. The rest was apportioned 7% to Tranch B rated BBB, paying 1.5% more than equivalent bonds and the remaining 3% to Tranche C, also known as the “equity” tranche, which was unrated and paying 10% above Treasury bonds. In case of default, Tranche C gets hit first until it is exhausted, then Tranche B and, finally, Tranche A. This is a “cascade” or “waterfall” pattern, common to all such collateralized products. Continue reading