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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (105138)	5/28/2001 1:17:12 AM
From: tyc:>	Respond to of 436258

Now the discussion becomes really interesting to me. For your suggestion kills the idea of "the option value of mines". Your suggestion espouses the principle of forward selling which, of course, simply kills the value of volatility. So the perplexing question is this : Does the forward seller simply abandon the value of volatility or does he TRADE_OFF the the value of volatility for the benefits of an interest pay-off related to the yield curve. Is this tantamount to turning the value of hedged production in to a bond ? Clownlike, I just had a feeling that the nature of the arbitrage would throw light on it !