A hedgerow of roses. (profiting from Tokyo's stocks drop)
Economist (US), The, March, 1990
HERE is an example of nifty opportunism. On January 11th Mr Christopher Mitchinson, Salomon Brothers' top Japanese stock expert, warned investors that fair value for Japan's Nikkei 225-share index was 35,000 and not the 39,000 at which it then stood. Five days later Salomon Brothers and Bear Stearns, another Wall Street investment bank, sold 12m Nikkei put warrants expiring in January 1993, each for $3.54. These warrants (another name for options) rise in value when the Nikkei index drops. They currently trade at just under $5, which has given their buyers a a handsome 30% gain in six weeks.
In quick order Goldman Sachs, Bankers Trust and Morgan Stanley have sold some 200m-worth of such puts, all listed on the American Stock Exchange (ASE) in New York. American...
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