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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: re3 who wrote (81577)	6/10/2000 8:24:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Ike, By definition, you have to have somebody on the other side of every trade, and individuals and funds are basically not in the derivatives game. Just banks and brokers. The problem is that they are all leveraged out the wazoo. Perhaps not as leveraged as Long Term Credit, as that verged on insanity and hubris. But still carrying positions with very little margin. So, the losers can lose much more than their capital if the trades go against them. The truth be known, most derivative trades are fairly low risk, low return in nature, hedged every which way from Sunday. It is the leverage that gives them all the risk. This is one of those deals where you win 1000 times in a row, but the one time you lose takes you down.