Hedging the hard way

The equity derivatives businesses of structured products issuers took a severe beating in the final quarter of 2008 as banks found themselves wholly unprepared for the extreme swings in volatility and correlation caused by the Lehman Brothers collapse. In such a scenario, managing equity derivatives books has proved fraught with difficulty. Dealers have been hit on all fronts, from quanto options to dividends to gap risk. Compounding their woes is the fact that this is the second bout of losses

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What gold's rise means for rates, equities

It has been several years since we have seen volatility in gold. An increase in gold volatility can typically be associated with a change in sentiment and investor behavior. The precious metal has surged this year on increased demand for safe haven…

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