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Non-Tech : Paired Trades and Hedging Strategies
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To: Biomaven who wrote (108)7/19/2007 7:40:02 AM
From: Robohogs   of 136
 
The super trade would be short Deutsche (if subprime spreads to credit generally, they get hit worst unless their trading ops can clean up, and they have great fixed income trading) and long ????? I cannot figure a safe long as Goldman prop trading would likely get hit hard, Bear is a goner, Lehman is as good in fixed income (and it is as important), JPM is more leveraged to sponsors (no pun intended!), Citi has been bad for years, .... Maybe make it a 5 way trade:

Short DB, Short Lehman
Long Merrill, Long Morgan Stanley, Long UBS

with the shorts having 1.5 weights and the longs 1.0 weights.

Jon
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