Cost of Hedging Weekly Update 8-2-13

Posted on August 2nd, 2013

Its been 2 weeks since our last weekly update (I know, but its summer…give me a little break) and the markets continue to rise to new highs. As of the close of business on the 1st  the short-term daily cost was 0.67 basis points and the mid-term cost out to January rose to 0.94 basis points per day.  
See data for the past 25 months on our Resources Page

These new highs continue to push the cost of hedging lower as there seems to be no fear in the market. Volatility and prospects of rising interest rates seems to have fled the options market pricing models lately and we’re approaching all time low costs if you want to buy protection.
The Fed decision and lack of language change from Wednesday did nothing to change the outlook of the markets. Earnings have also been ineffective in pushing costs higher, all to the hedger’s benefit. 

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