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Did Someone Make $10B on $1B Bet on Downgrade?


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Ugh, not the Daily Mail.  That is a dreadful piece of tabloid trash.  The article is just terrible all around: no real information, no credible sources cited, no anything worth reading.  First, if I recall, the bet was a short on Treasuries.  Whoever that person is, the thesis, I think, was for rates to skyrocket.  That has not happened.  The total purchase was for 8470 10-year treasury futures.  Each future has a notional value of $100,000 which means that it roughly corresponds to buying that much of a treasury bill. So the notional size of the bet is roughly 1 billion.  However, the future has barely move as a result of the downgrade.  As it currently stands, the bet hasn't even come close to paying off the 10 to 1 returns.  I don't know where they get that number from.

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