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Strategies & Market Trends : P&S and STO Death Blow's
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To: h8_2_b_l8 who wrote (4273)7/27/2002 1:28:16 PM
From: Boca_PETE  Read Replies (1) of 30712
 
h8_2_b_|8: re:("the US government would require JPM to unwind this massive derivative position")

Interesting article, but can you provide the rationale under which the government would make such a requirement?

Also, by "massive", I guess what is being referred to is the "NOTIONAL AMOUNT" of JPM's derivative position. However it's my understanding that under a derivative contract, the parties agree to pay or receive from/to each other THE CHANGE IN VALUE of the notional amount of the designated underlying (ie. commodity, foreign currency, debt instrument,...whatever or some combination these), NOT THE NOTIONAL AMOUNT ITSELF. Thus to me it appears to be a question of whether or not JPM has the resources to pay out any NEGATIVE CHANGE IN VALUE of its' "massive" derivative position. As you can gather, I have my doubts about that doom-gloom article you linked to.

P
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