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My understanding of that Soros trade is that it was not an actual short (the product was not public), but it was a synthetic product that was correlated on the
by warp_factor 7y ago
My understanding of that Soros trade is that it was not an actual short (the product was not public), but it was a synthetic product that was correlated on the Lyft ticker, that probably behaved like a Short but wasn't a short.
- ackbar03 7y agoIt's still a short. The banks who sold the trade to soros still need to hedge their exposure by shorting the stock. The short position still gets reflected, if anything it probably amplifies the effect since it's created from a derivative
- warp_factor 7y agoWhy would the bank need to hedge their exposure? Isn't part of their job to create those type of synthetic products based on risk profiles and trade them accordingly? They might have edged their position by issuing an actual short, I'm only saying they don't necessarily have to.
- stygiansonic 7y agoThey would need to hedge their exposure because they're generally not looking to make money off of something like this based on the direction. If they're completely unhedged, and LYFT tanks, that would be a huge loss for them. From what I understand they make their money off of a deal like this by either taking a cut or fees.