> Long Term Capital Management, a highly leveraged hedge fund whose directors included the two Nobelists, collapsed and had to be bailed out to the tune of $3.65 billion by a group of banks.
$3.65 billion? that seems rather quaint these days.
Indeed. In retrospect, it's somewhat ironic that the group of banks that bailed out LTCM included Merrill Lynch, Lehman Brothers, and AIG. The "bailers" became the "bailees".
You know who didn't bail out LTCM? Bear Stearns - the first to fall. They wouldn't play ball and it's widely assumed that the other banks saw a chance to make them pay.
Maybe. But the banks have a relentlessly resourceful profit motive. More likely, the regulators were more keen to hang them out to dry for not cooperating with LTCM.
Also, Bear Stearns always was a much smaller and weaker institution. Maybe they simply couldn't afford the risk then and now.
Exactly. If you want to be good in options trading, be good at physics. Acceleration and deceleration of options values are very interesting (and very valuable) in volatile markets. And as the article states there is no Pi solution. It's simply fun to apply physics to financial markets when applicable.