Last week I wrote about how one might construct a Principal Protected Put (“PPP”) (thank you PW) to buy protection for a downside move in a home price index, at the cost of foregoing income. Today, I’d like to highlight the opposite strategy, where one might accrue a higher coupon, … Read More
How would you like to buy a product where: a) you participate if home price indices fall below current levels, and b) you’re guaranteed to get all your upfront money back if they don’t?
A number of factors have changed to (financially) allow the creation of a principal protected put … Read More
With Seattle being one of the strongest home price markets in the country, some homeowners might be worried about a retreat in prices. Of course, they might prefer not to sell their homes, uproot their families, and move into a rental for both cost and logistical reasons, just to express … Read More
I recently did a trade in DEN.G18.P2000 (that is, puts on the Feb ’18 DEN contract with a strike of 200. Here’s a graph that shows the P&L of the trade, were one to sell (write) those options at a price of 4.0.
I think that this is a useful … Read More