News for hackers. Stuff that matters.

A comment on Wall Street’s Latest Love Affair with Risky Repackaged Debt. Parent comment

Re:Wall Street’s Latest Love Affair with Risky Repackaged Debt by csomar on Wednesday March 20, 2019 @05:19AM (#19440319)
For car insurance you need to buy a car. For debt insurance, not really. I think the editor meant "debt options" but used the word insurance because he was targeting a non-sophisticated audience.

Real life is a little bit different though. How many option sellers are you going to find if the company is easy to drive to bankruptcy?

[ Parent | on HN ]
Re:Wall Street’s Latest Love Affair with Risky Repackaged Debt by cinquemb on Wednesday March 20, 2019 @06:16AM (#19440610)
> Real life is a little bit different though. How many option sellers are you going to find if the company is easy to drive to bankruptcy?

Well, right now, "somebody" is selling long dated OTM put options on some ETF's that are filled with +95% junk rated bonds and/or CLO's, with some of the strikes having +100k OI for pennies on the dollar (ex. HYG60P12202019), which in normal times might be easy money from selling… I'm sure the big boys have better ways of getting exposure as well.

[ Parent | on HN ]