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Technology Stocks : Leap Wireless International (LWIN)
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To: Jon Koplik who wrote (1747)3/14/2002 9:21:07 AM
From: Robert J. Irvin  Read Replies (1) of 2737
 
5.5% Libor in a reasonable "worst case" scenario? Why not? In the falling rate cycle just ended, 3 month Libor fell from just over 6.8% in May 2000 to about 2% now. In the rising rate cycle from Jan 1994 to Dec 1994, 3 month Libor rose from 3.25% to 6.5%. Except for this cycle, you have to go back to 1994 to find Libor under 4%. My reasonable(?) "worst case" is flavored by what I consider to be a very high probability that the U.S. will attack Iraq soon, an event that may test market complacency.

But in truth, I don't trade interest rate futures, as you do, and would welcome a more informed Libor estimate for a reasonable "worst case" scenario, say, one or two standard deviations from an informed "most likely" scenario, your choice. As a suggestion, if the options cost to hedge your initial "worst case" choice is too high, then you may have to extend out the "worst case" scenario to where the cost of hedging it is low. On $1.85 billion of vendor financing debt.
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