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Questions tagged [swaps]

A swap is a derivative contract through which two parties exchange financial instruments.

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3 votes
2 answers
518 views

Is overnight rate swap ETF viable alternative to low-risk bank products?

I live in a eurozone country. While the ECBs deposit facility rate is 3.75%, interest rates on savings accounts and similar low-risk products are less than 1% with the best offer being 2%. Overnight ...
kubek's user avatar
  • 31
0 votes
0 answers
37 views

Total Return Swaps

I am trying to understand better Total Return Swaps and how they are priced (I have heard about projection-based and accrual-based models), can any body recommend good material to read (books, ...
Abelardo's user avatar
0 votes
1 answer
483 views

Canadian total-return swap ETFs — 2 things I'm wondering how these work

There are Canadian ETFs from Horizon which operate as “total return swaps,” including HXS (tracks S&P 500) and HXT (tracks the total return of the S&P/TSX 60). From a 2011 CanadianCouchPotato ...
Dan Lenski's user avatar
2 votes
2 answers
4k views

How does "selling" a credit default swap works in the Big Short?

I have watched The Big Short several times, watched a bunch of clips, and searched in youtube lots of explanatory videos. I am not even close to understand all the concepts shown in the movie, but I ...
Simon's user avatar
  • 21
-1 votes
1 answer
196 views

When I take a position in a perpetual future (e.g. 3x long), must there be someone holding the opposite position (3x short)?

When I take a position in a perpetual future (e.g. 3x long), must there be someone holding the opposite position (3x short)? If so, suppose I entered a long 3x position on an asset at $100 and you ...
Crocodile's user avatar
1 vote
0 answers
82 views

How does the swap and collateral work in this context?

The ETC (exchange traded commodity) is backed by swaps. The payment obligations of the swap counterparties to the Issuer are protected by collateral held which is marked to market daily. The ...
Clone's user avatar
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1 answer
50 views

Are there interest rate swaps that are not OTC? [closed]

a. Are there any interest rate swaps that are not classified as OTC ? Could you please give an example. For example: spot starting, benchmark starting, broken dated, etc b. Where is that ...
mockinterface's user avatar
0 votes
2 answers
148 views

Credit­-default swaps

Can someone explain in laymen terms what exactly are credit-default swaps? And how do hedge funds made a killing on them during the market crash in March? (I am assuming these are debts that parties ...
Steve237's user avatar
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-1 votes
1 answer
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Combining adjustable rate mortgages and interest rate swap

The interest rates for mortgages are at a historic low. In order to be able to profit from low interest rates in the long term, fixed mortgages with long terms (10 years) are very popular. One problem ...
DavWEB's user avatar
  • 204
3 votes
3 answers
2k views

What, exactly, are the "S&P 500 index swaps" held by UPRO?

I've thought about investing in UPRO, the ProShares UltraPro S&P500 3x leveraged ETF. But, of course, I don't want to invest in it until I have a good understanding of it, including its historical ...
Tanner Swett's user avatar
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0 votes
1 answer
254 views

When pricing interest rate swaps at inception, should the fixed rate or floating rate be priced first?

In an interest rate swap, when pricing at inception (e.g. making sure the NPV is zero at inception), is the fixed rate set first and then the floating rate calculated (or vice-versa, e.g. floating ...
user1786107's user avatar
3 votes
2 answers
2k views

What is the Euro 10 yr Swap?

I know that a swap (more specific an IRS) is an OTC product to exchange future payments base on a principal. In this case, the interest on the fixed leg will be computed trying to have a NPV of 0, so ...
david.t_92's user avatar
2 votes
1 answer
883 views

What's the difference between a variance swap and a long straddle option trade?

A long straddle is when one is anticipating a swing in stock price, but you’re not sure which direction it will go. And a variance swap is a financial derivative used to hedge or speculate on the ...
JDK's user avatar
  • 55
2 votes
1 answer
238 views

Selling Interest Rate Swaps

Suppose two parties have entered into an interest rate swap. Would it be possible for one party to sell their portion of the contract to another party? Or would that party have to enter into an ...
Skrrrrrtttt's user avatar
0 votes
2 answers
136 views

Hedging against currency risk

Is there a hedging method against currency risk without lowering returns ? Classic hedging methods like forwards, futures options, all have a cost and don’t remove risk “for free”.
user71822's user avatar
1 vote
1 answer
286 views

Swap hedging a currency hedge

I want to open a short position for USD/JPY that I intend to leave alone for a while in order to currency hedge my investments. Last year, my US stocks appreciated quite a bit and I don't want to ...
gengren's user avatar
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9 votes
2 answers
39k views

What are libor swap rates?

In the Wall Street Journal there is a list of money rate benchmarks. One of them is LIBOR swaps (USD), whose description is LIBOR swaps are mid-market, semi-anual swap rates and pay the floating 3-...
John D's user avatar
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3 votes
1 answer
258 views

Does the current Dodd-Frank Act ban speculation in OTC swaps?

Does the current version of the Dodd-Frank Act ban speculative positions in non-exchange cleared (OTC) swaps? It does not refer to any specific type of swap, but my current understanding of the bill ...
Matt Phillips's user avatar