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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: macavity who wrote (41202)	11/10/2003 6:07:39 PM
From: Mark Adams	Read Replies (1) \| Respond to of 74559

If FX volatilities are roughly 7-10% p.a., they compare well to share in the nasdaq and oex. VIX readings below 20 may have been the norm prior to '95, but raise eyebrows these days. Maybe it's the higher leverage used in FX markets that results in heads rolling. FX risk far outstrips the yield differential How much would an option (pricing based on Black Scholes model) cost to hedge a 10% move in a 1 million nominal USD/YEN cross for one year? I don't expect you to know, I certainly don't. I would be surprised if the cost exceeded 3% of the 1 million nominal. Haim could probably tell us. amazed at the leverage community These guys have experience and knowledge gleaned that lets them do these calcs in their heads; they know what to expect before the bug hits the windshield. Assuming the bug hits the windshield. Plus you have the heads I win, tails I'm unemployed factor at work. The reward for taking the bet and winning often outweighs the pain of unemployment. Especially if odds favor several wins before you blow yourself up.