Big Loss, Big Win (JP Morgan)?

S

Swami

Veteran X
So I've read several articles about this $2B loss and what I'm trying to figure out is: where'd the money go? Was someone betting against them and made $2B?

Anyone?
 
Swami said:
So I've read several articles about this $2B loss and what I'm trying to figure out is: where'd the money go? Was someone betting against them and made $2B?

Anyone?
Click to expand...

The gains were distributed over many market participants. The basics of what happened were that JP Morgan had too much risk exposure for their taste to a particular asset. Instead of reducing that risk by simply reducing their position, they made a large bet against a different security that historically had always moved parallel to their original security. Instead, though, the two securities split, and JP Morgan took a loss on both. The winners were all the smaller investors who happened to be on the opposite sides of the two positions.
 
the 2b is headline, they originally stated that there was an 800m gain in another division and after taxes it comes out to about an 800m loss, but 2b is sexier to mention.

whale in london
 
No, it will be greater than a 2 bn loss. It's hard to unwind a short position of that size that quickly without further loss, and now that the position is known to the market, others will be adding bets against jpmorgan s short position, further adding to the pain.

Also DV01 of $200m. Ouch
 
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Two Billion is nothing for an organization JP Morgan's size.

Well, not nothing. But I doubt it'll even have an impact on their bottom line.
 
Do you not understand how markets work?

Someone else won because JPM lost. I guess for someone who isn't in finance and just throws money at their 401k without really understanding it, this is probably a foreign concept.
 
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