A proposal to jump-start HPHF agreements for Seattle

I'd like to jump-start activity in Seattle index agreements (and beta-test the platform) by proposing to buy or sell Seattle home price index at one price. That is, I'll offer to buy or sell one HPHF agreement on the Freddie Mac Seattle SA index, for the January 2020 release (which references the Dec 2019 year-end numbers) at 239.7. (See bottom of HPHF page for link to Freddie index page.) The current Seattle index is 242.1, so this is a 1% discount from spot.

Read the HPHF marketing material for details, where you'll see that one lot has notional value of $100 * price, or about $24,000.

A trade would be structured as offering either a 220 Call (with a Cap at 260) at 19.7 points, or $1970, or a 260 Put (with a 220 Floor) for 20.3 points, or $2,030.

A counter-party will need to contact me for forms (under construction).

While my intention is to eventually hold auctions and match interested buyers and sellers, I sense that I may have to "stir the pot" with a locked market to generate some initial interest.

I have no insight as to whether the Seattle index is headed up or down, but just picked this price as it seems to incorporate both the recent downward trend, as well as the recent good news (e.g. bounce-back in sales, with lower interest rates). Again, my longer-term goal is to offer a platform where users can add/reduce bite-sized exposures to a local index, either in anticipation of buying (so a Call buyer), or to reduce risk to home price fall.

Contact me (via Contact button on main page) if interested.

Thanks, John