Today I just bought a put option on JPM (JP Morgan Chase) for September at a $20 strike price. Everyone is pumping up this bank because of "their superior management" and their ability to weather the financial storm better than the other banks.
In reality, JP Morgan holds trillions of dollars in derivatives. According to the OCC’s Quarterly Report on Bank Trading and Derivatives Activities for the Fourth Quarter 2008, JP Morgan held $87,362,672,000,000 in derivatives at the end of 2008. That's for the mathematically challenged. It's astonishing that they can have so much exposure with just $1,746,242,000,000 in assets. That's 50 times their assets! They are the biggest holder of derivatives out of all the commercial banks.
Tuesday, April 7, 2009
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