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To: Ilaine who wrote (4671)	6/10/2001 4:00:18 PM
From: Mark Adams	Read Replies (2) \| Respond to of 74559

There is a world of difference between exchange traded options like puts and calls and the much larger world of derivatives like 'interest rate swaps' and fx hedges. The nominal amount of derivatives (in trillions) is often bandied about, when most are held on books with offsetting positions. Counter-party risk in meltdown mode could be an issue, as this would wreck the risk management & hedging process that the big players use. Discontinuous markets also present some risk. I'm a novice with these things- I read about them in 10Qs and occasional press releases. I think the SEC and FASB have made an effort to get better reporting on individual company positions, which helps build awareness and understanding of what they are and how they can be applied. It really is financial engineering- being a CFO requires much greater sophistication than I thought a few years back.

To: Ilaine who wrote (4671)	6/10/2001 4:07:51 PM
From: Stock Farmer	Read Replies (1) \| Respond to of 74559

Hi CB: I didn't think it was illegal to end up owing more than you can pay (happens all the time). Isn't there always the stupidity defense? Like: "Honest, I was sure CSCO was going to $50 back when I sold all those June 40 PUTs". Which, by the way, is also an example of using a derivative in such a way as to lose a lot of money AND own a whole bunch of very expensive wall paper. John

To: Ilaine who wrote (4671)	6/10/2001 4:15:55 PM
From: LLCF	Respond to of 74559

<Apparently hedge funds get away with it because there is no requirement for transparancy. I know for a fact the BIS is trying to force transparency on hedge funds, and the Fed is, too.> Individuals can do it too, it's a matter of what you can get a lender to lend. I know houses that will give you 10:1 leverage to trade with if they know who you are. 5:1 for most shmo's on the street.<NG> DAK