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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (69509)9/8/2006 2:11:20 PM
From: benwood  Read Replies (2) of 110194
 
Russ, it's like the deposit for the house is just a covered call option, and the ones they've been selling are quickly moving "out of the money" as the deposit they can get (i.e. the covered call price) collapses. The underlying stock value (the house price) is therefore declining rapidly. Soon perhaps the deposit will be just $50 as they hope to keep the numbers from getting out of hand. Of course, cancellations will approach 100% if they don't lower the strike, er, sales price.
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