The Dean’s Trades: Black Monday Afternoon Update 9/15/2008
September 15th, 2008 at 12:29 pm Posted by The Dean
The TED spread spikes to a 6-month high. The TED spread can be used as an indicator of credit risk. This is because U.S. T-bills are considered risk free while the LIBOR rate reflects the credit risk of lending to commercial banks. As the TED spread increases, the risk of default (also known as counterparty risk) is considered to be increasing. We could be looking at an all time high later today or this week. The TED spread is a measure of liquidity and shows the degree to which banks are willing to lend money to one another.
CNBC claiming that Warren Buffett may be interested in investing in AIG. CNBC’s Buffett buyout rumors over the last 2 years are 1 for 22.
Just sold COF short and hedged by selling an equal amount of October 35 puts.
