Delta One desks trade delta one, i.e. linear or non-option, equity products. The heart of this is usually equity return swaps.
Financial Markets
History of 1987 Stock Market Crash
On October 19, 1987 the stock market in the U.S. along with the associated futures and options market crashed with the S&P 500 stock market index falling about 20 percent (A considerably large percentage fall). The causes of concern were … Continued
The Mechanics of Carry Trade
Carry trade is a strategy in which an investor borrows or sells a financial instrument with low interest rate and uses the proceeds to lend or purchase a financial instrument with high interest rates. For example, an investor can borrow … Continued
Ratios to Assess Stock Value for Beginners
For a lot of us playing the stock market seems like risky business, which needs an extremely high level of expertise. The stock market seems full of complexities. How to pick a stock, which sector, how to assess their performance … Continued
Investing in Oil: A Risky Yet Lucrative Market
Gold and oil are investments that can never go wrong in the long run. The demand for oil is only growing, not reducing. As the world sees a host of countries in Asia ramping up growth, there is going to … Continued
Worst Performing Bank of Year 2011
The year 2011 did not fair well for the banking sector as many banks lost substantial value by the end of the year. Some of the problems faced by banks are increased regulatory requirements, declining margins, and loss of revenue … Continued
Infographic: What is an ETF?
An exchange-traded fund is an investment fund, similar to a mutual fund, which is pegged to a financial index. Unlike mutual funds, which are priced once in a day, an exchange traded fund trades on exchanges throughout the day, just … Continued
Leverage Cycle and the Subprime Mortgage Crisis
Standard financial theory left us woefully unprepared for the financial crisis of 2007-09. Something is missing in the theory. In the majority of loans the borrower must agree on an interest rate and also on how much collateral he will … Continued
Risk, Return, and Social Security
This lecture addresses some final points about the CAPM. How would one test the theory? Given the theory, what’s the right way to think about evaluating fund managers’ performance? Should the manager of a hedge fund and the manager of … Continued
The Mutual Fund Theorem and Covariance Pricing Theorems
This lecture continues the analysis of the Capital Asset Pricing Model, building up to two key results. One, the Mutual Fund Theorem proved by Tobin, describes the optimal portfolios for agents in the economy. It turns out that every investor … Continued
