All I know is when I started getting mailers DAILY from lendingClub with magical terms I figured it was some sort of pyramid scheme. I worked in finance during the recession, you can smell a desperate entity a mile away trying to cover its books.
Not sure if that's worded the best way--still learning about how the accounting for this works.
In order to make out you need to satisfy the terms of Y seller's contract before they fold -- and balancing the incentives vs unknown risk of Z at unknown time, its probably not worth your time.
The exception to that is: You have enough capital to sign a contract so big it actually forces Z event, then have the political clout to make sure the court rules in your favor rather than the investors. All the while also buying insurance against Z event. Then you have something similar to Goldman Sachs' profitable moves during and after the Great Recession.
'Margin Call' is an excellent and thrilling film that dramatizes these concepts and shows how they can play out on the trading floor.
Will check out Margin Call.
What about outside of huge industry shifts like The Big Short portrayed? I'm most interested in how this plays out in the day-to-day when there isn't a huge industry-wide scandal at play.