INDUSTRY S1E3: Harper's Big Idea - Multi asset & High margin
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- เผยแพร่เมื่อ 7 ส.ค. 2024
- Industry Season 1: We're analyzing Harper's idea in response to Eric's demand for high-margin, multi-asset ideas. It's a hedge on the housing market, that implies a call on gold!
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what if we short commodities related to the construction of a house, buy the put option in the index Harper described and maybe also buy in an auto industry index(my guess would be that if demand for housing falls but income stays the same for households then they may reorient into buying a new car increasing demand for cars)
awesome suggestion thanks
Interesting analysis, thank you.
Much appreciated
maybe a buy-call/sell-put on the inverse treasury yield with a buy-put/short-call on the housing market?
Thanks doc - what underlying should we use for the housing market?
The CDS doesn't need you owning the underlyings right? I remember in the movie "the big short" the banks can simply underwrite a bunch. It's probably not the cheapest products compared to options.
A brilliant question that raises quite a few points I'll answer properly in a bit
No you don't need to own, it but you need to pay the underlying's coupon. It's a swap that consists in a string of payments so it can be seen as '0 cost' whereas for options there is a premium upfront.
I don't think a CDS fits in the product that she's trying to sell here, it feels out of place.
@@InvestOrama depending on the spread, you do pay or receive upfront premiums on CDS. Theyre not 0 cost. It’s been that way since they were centrally cleared, which is well over a decade.
@pejpm Id need to rewatch it but I think it's not the CDS thats zéro cost but the whole structure. Use the CDS premium to pay for the rest
What product do you think she should pitch instead?
A rate linked note on the treasury yields with interest accrual triggering when yields fall below a threshold
@@sohamdas a product for 2024?
@@InvestOrama may work, assuming fed cuts rates as bankruptcies mount.
Alternately, a TRS on S&P 500 and Builders Index (maybe a bit vanilla though)
@sohamdas do you want to short the S&P500? ⚠️☢️
@@InvestOrama the swap will be to receive S&P500 returns and pay Builders Index
If she thinks housing market will struggle, housebuilders not the only option here. Housebuilders about new homes so its also highly correlated to employment, debt rates and policies (such as FTB). In the show, the research chap says the bank is confident on housing market so they could simply design a total swap (derivative) on UK annual residential returns(IPD). It might cost them a bit, but thats the insurance for a possible payout.. To create such SWAP you also need to have opposite party who thinks completely opposite (C:
Good idea - the problem is that this index is not treadeable. You can't just find another counterparty, you need a market makers. For property there was one attempt at creating a market on the actual property prices by creating future, but it failed (the futures are still there but the volume is 0).
What's the music name ?
blunt - free music library on youtube
I think I’ll start watching the show
Enjoy
@@InvestOrama I hope it’s good. I like quick witted, fast paced shows that are written well.
The finance part is just a plus.
First seasons are great. You can stop at season 4
@@InvestOrama there are only two seasons of Industry though/
Haha I got confused with Billions