Perpetual+: 03 July 2009

It was a boring week just looking at close-to-close, starting at 11,037.14 on Monday and finishing at 10,983.77 on Friday, but the volatility was in its intra-day moves. For two days, the market started up about 250 points to see it evaporate to finish flat, while today it started down about 250 points to finish slightly positive. What a week.

Close-to-close volatility continues coming down and the Multiplier is now at the highest, since the inception, at 3.41. Target exposure is now, for the first time, above 100%.

Date Index O/N Libor BF HSCEI Index Vol Multiplier TE W RPV $ RPV $ W
29-Jun-09 10987.57 0.02 76.24% 109.08% 36.55% 3.28 96.73% 96.73% 108.10% $540,480.36 $522,817.88
30-Jun-09 10962.61 0.11 76.24% 108.84% 36.14% 3.32 97.32% 96.73% 107.86% $539,292.75 $521,669.08
2-Jul-09 10971.89 0.00 76.24% 108.93% 35.20% 3.41 100.11% 96.73% 107.95% $539,734.35 $522,096.25
3-Jul-09 10983.77 0.00 76.24% 109.05% 35.19% 3.41 100.39% 96.73% 108.06% $540,299.66 $522,643.09

Given the ridiculous bid/ask on 63329 HK (it was around 7% on Thursday...), I decided to minimise crossing that and instead bought 30,000 contracts of 64581 HK, issued by ABN Amro, whose bid/ask was only 5bps.

 

Date Ticker Last Price Contract to Hold $ Contract to Hold Contract to Buy/Sell $ Contract to Buy/Sell RPV Daily PnL Tracker Daily PnL RPV Daily Cumul PnL Tracker Daily Cumul PnL
29-Jun-09 63329 HK 0.239 680,000.00 $162,520.00 60,000.00 ($14,340.00) ($2,138.13) $0.00 $40,480.36 $40,536.00
30-Jun-09 63329 HK 0.239 680,000.00 $162,520.00 0.00 $0.00 ($1,187.61) $0.00 $39,292.75 $40,536.00
2-Jul-09 63329 HK 0.239 650,000.00 $155,350.00 (30,000.00) $7,170.00 $441.60 $0.00 $39,734.35 $40,536.00
  64581 HK 0.186 30,000.00 $5,580.00 30,000.00 ($5,580.00)        
3-Jul-09 63329 HK 0.243 650,000.00 $157,950.00 0.00 $0.00 $565.31 $2,630.00 $40,299.66 $43,166.00
  64581 HK 0.187 30,000.00 $5,610.00 0.00 $0.00        

What did I say then?

Risk management may now be ready for prime time | Chet Currier

That is why we need minimax!

Working with "incomplete knowledge, a central bank needs to consider not only the most likely future path for the economy but also the distribution of possible outcomes about that path" - Alan Greenspan

In his first speech of the new year, Alan Greenspan came as close as he ever does to dispensing investment advice.

The Federal Reserve chairman told the American Economic Association that policy-making at the central bank had come increasingly to be guided by what he called "risk management".