HPHF_CLT.pdf

Welcome to Home Price Hedging Fund ("HPHF"). HPHF was created to allow approved counterparties a tool to facilitate hedging of home price indices not referenced by CME contracts. Details of the fund can be found in this blog, or in the Resources section below (under construction).

* HPHF OTC home price index agreements can be structured on any public home price index, referencing year-end index values. HPHF intends to focus on the top 100 Freddie Mac NSA indices, and to target 1-3 year expirations.
* While Absolute Price agreements can be structured, Relative Performance agreements, that offer a more capital-efficient execution, can also be created.
* While Agreements may be referred to as "Forwards" they are structured as options. As such, "longs" will buy deep-in-the-money Calls, and "shorts" will buy deep-in-the-money Puts. (As such no user will have a short position -although deep in-the-money puts might trade similar to a short position, over limited price ranges.
* Agreements (Forwards and Options) cannot be exercised before expiration. Trading out of a position back to HPHF is allowed, but liquidity is not guaranteed. All Agreements will auto-exercised at maturity.

* Before the first agreement, users must submit signed risk disclosure form, a counterparty approval application, and submit the application fee.
* Agreements are structured to boundary conditions on index moves (ranging from +/- 10-20%) capping pay-outs.
* The proceeds from purchase of puts and calls will fund the bounded range of outcomes. That is, all exposures will be collateralized. Collateral will be held by HPHF.
* No additional funds will be collected from counterparties once options are fully paid for.

* Auctions for Agreements may take place when sufficient interest arises from both sides.
* Absent demand for an auction, HPHF may take counter-party role. (Expected to be the case for first agreements.)
* See Trading Axes sections for pending inquiries, or suggest regions that you'd like to discuss (via Contact link).

* While my intent is to facilitate forward agreements, HPHF is also willing to enter OTC options. See Options page for trading axes.




Please see links below for Resources and Indicative quotes.
Please contact me Contacts section. if you have any questions, or hedges that you'd like to discuss.