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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (16723)	1/26/2009 4:57:06 PM
From: RockyBalboa	1 Recommendation Read Replies (1) \| Respond to of 71456

I am well aware of the term swap for it and how they have been designed to circumvent regulation as insurance. However, they also hardly meet the common definition of a swap (except that a certain risk is swapped). In fact they are more like a series of options,like a cap or floor or as I said, an insurance against bad weather in the economy; the buyer pays premium periodically something which is best compared to an options, or insurance premium because it buys time and nothing else (in the more distressed cases the swap goes "upfront") and in return receives the right to put an underlying security (= no more; receive the positive cash difference of a side bet made on the security). They are, in fact an insurance just misnamed. See: investopedia.com investopedia.com To add a point: as I said, they are no (market) risk management tool; unlike a total return swap they do not insure against fluctuations in interest rates.