More Odds (Fed Cut) & Ends 08/02/07
American Home Mortgage Investment Corp. yesterday told employees that the company would shut down all operations tomorrow.
The Wall Street banks that lend American Home Mortgage money for home loans — which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co.
— will not extend the company any more money, and some have demanded back the money they have lent.
William Polley posts: Shortly before noon 07/27, there was a posting of a trade of 500 Fed Binary Options for December 07.
Specifically, they were call options with a strike price of 94750. The trade was completed at a price of 41 ($410 per contract). That is the only open interest on that contract so far.
A long position in this contract receives $1000 per contract if the fed funds target is less than 5.25% (the prevailing rate today) on the day after the December 2007 FOMC meeting.
In case you're interested, the latest prices for similar options maturing in August, September, and October are 9, 20, and 28 respectively.
The Nattering One muses... So somebody bet $205,000 that the Fed will lower by year end with a chance of winning $500,000.
Maybe somebody knows something? As posted in our Fed Beige Book report:
"will Bennie & The Feds cut at the end of October, as they should, or will they continue to fiddle and watch as Nero did..."
David M. Jones former economist at the New York Fed: Bernanke "will have to begin to start cutting rates before the end of the year. I don't see him doing that.
They're going to continue to worry about inflation while Rome burns on the credit side."
At any rate (no pun intended) the Nattering One likes the bet and still believes that the Fed will be forced to cut by Halloween.
The Wall Street banks that lend American Home Mortgage money for home loans — which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co.
— will not extend the company any more money, and some have demanded back the money they have lent.
William Polley posts: Shortly before noon 07/27, there was a posting of a trade of 500 Fed Binary Options for December 07.
Specifically, they were call options with a strike price of 94750. The trade was completed at a price of 41 ($410 per contract). That is the only open interest on that contract so far.
A long position in this contract receives $1000 per contract if the fed funds target is less than 5.25% (the prevailing rate today) on the day after the December 2007 FOMC meeting.
In case you're interested, the latest prices for similar options maturing in August, September, and October are 9, 20, and 28 respectively.
The Nattering One muses... So somebody bet $205,000 that the Fed will lower by year end with a chance of winning $500,000.
Maybe somebody knows something? As posted in our Fed Beige Book report:
"will Bennie & The Feds cut at the end of October, as they should, or will they continue to fiddle and watch as Nero did..."
David M. Jones former economist at the New York Fed: Bernanke "will have to begin to start cutting rates before the end of the year. I don't see him doing that.
They're going to continue to worry about inflation while Rome burns on the credit side."
At any rate (no pun intended) the Nattering One likes the bet and still believes that the Fed will be forced to cut by Halloween.
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