HOUSING DERIVATIVES

Housing Futures & Derivatives - S&P/Case-Shiller Indexes For May 2007 Released

Below is table showing the month-on-month change of the S&P/Case-Shiller Index:

S&P/Case-Shiller Index - May 2007

Apr07 v May07

Bos +0.80%
Chi -0.11%
Den +1.08%
LV -0.82%
LA -0.06%
Mia -1.47%
NY -0.45%
SD -0.36%
SF -0.27%
WDC -0.43%
Comp -0.29%

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Derivatives - The Highest ABX Index Tranches Make New Lows

The highest rated tranches of The ABX Index, credit-default swaps based on bonds consisting of 20 subprime mortgages , for the 07-2, 07-1 and 06-2 series all settled on their lifetime lows. These tranches, AAA, AA and A, are the "most secure" investment series of the subprime mortgage derivatives indices. Source: Markit.

Housing futures and forwards are showing lower housing prices into 2008 and 2009 in all US metro areas. Tomorrow, the May 2007 S&P/Case-Shiller Home Price Indices are released.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - Taking A Financial View On US Housing Prices

There are several financial securities available for expressing a view on the US housing market.  They are all notably different, in that they cross equity, fixed income and "commodity" asset classes.  Because of these differences, the change in housing prices and the change in value of these other financial instruments may be moving in parallel universes over a period of time.  They are all members of the same "real estate" family but may arrive to different places financially.

The core products available for expressing a view in real estate markets are as follows:

• Direct Investment
• Equities
• Residential Mortgages and ABX Indices
• Housing Futures and Forwards

The advantages of housing futures and forwards are:

• Pure play on housing market
• Transparency
• Simple or complex to suit
• Allow for national, regional or specific MSA exposure

The major disadvantage right now to US housing futures and forwards is its untested trading liquidity.  When trading liquidity grows in breadth and depth, then housing futures and forwards will fulfill its potential.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - More Appetite To Trade Housing Derivatives

Business Week published a short srticle on S&P/Case-Shiller Home Price Index and Radar Logic home price index. The article contends that the US housing "bust" has heightened the professional investor appetite to trade derivative contracts that settle against these home price indices. Radar Logic is expecting trading to begin this September. The CME plans to introduce multiyear futures and options listings for the S&P/Case-Shiller Home Price Indices. Existing CME futures and options extend out one year right now.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - First Japan Property Derivatives Trade

A Japan index real estate derivative traded between Royal Bank of Scotland and Grosvenor, marking the first ever property derivatives trade for Japan.  The index was supplied by IPD, the leading real estate derivatives index provider for the UK and European markets. 

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - ABX Gaps Lower, All Tranches

The BBB- 07-2 tranche of The ABX Index, credit-default swaps based on bonds consisting of 20 subprime mortgages , is available to subprime mortgage derivatives investors. Today the ABX BBB- 07-2 series, referencing 20 subprime ABSs issued in first half 2007, settled at 40.39%. The ABX BBB- 07-1 settled today at 37.72%, it's all-time low. Source: Markit.

The ABX AAA 07-1, the highest tranche of the 07-1 series, settled at 92.97%. This is the lowest value for any of the AAA tranches - the highest mortgage recovery tranche with the subprime mortgage derivatives space is expecting losses.

Housing futures and forwards are showing lower housing prices into 2008 and 2009 in all US metro areas.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - ABX Subprime Mortgage Index On Lows

The BBB- 07-2 tranche of The ABX Index, credit-default swaps based on bonds consisting of subprime mortgages, is the new BBB- series on offer for subprime mortgage derivatives investors. Today the 07-2 series, referencing 20 subprime ABSs issued in first half 2007, settled at 47.31%. The ABX BBB- 07-1 settled today at 41.79%, it's all-time low. Source: Markit.

The ABX AAA 07-1, the highest tranche of the 07-1 series, settled at 95.05%. This is the lowest value for any of the AAA tranches - the highest mortgage recovery tranche with the subprime mortgage derivatives space is expecting losses.

Housing futures and forwards are showing lower prices into 2008 and 2009 in the Miami and LA metro areas. These two MSAs have the highest issuance of subprime mortgages since 2005.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions.

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Housing Futures & Derivatives - ABX On All-Time Lows

The BBB- 07-2 tranche of The ABX Index, credit-default swaps based on bonds consisting of subprime mortgages, is the new BBB- series on offer for subprime mortgage derivatives investors. Today the 07-2 series, referencing 20 subprime ABSs issued in first half 2007, settled at 47.86%. The ABX BBB- 07-1 settled today at 42.10%, it's all-time low. Source: Markit.

The highest tranches of the ABX Index, the AAAs, are all fully off of their 100% par values, with the 06-2, 07-1 and 07-2 AAA series settling at 96.43%, 95.13% and 98.03%, respectively.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions..

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Housing Futures & Derivatives - New ABX Index BBB- Series Debuts At 50 Cents On The Dollar Value

The BBB- 07-2 tranche of The ABX Index, credit-default swaps based on bonds consisting of subprime mortgages, is the new BBB- series on offer for subprime mortgage derivatives investors. Today was the debut of trading for the 07-2 series, referencing 20 subprime ABSs issued in first half 2007. The ABX BBB- 07-2 settled today at 50.33%, it's first day of trading. The ABX BBB- 07-1 settled today at 44.86%. Source: Markit.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions..

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Housing Futures & Derivatives - California Seminars

The US Property Derivatives market is opening its doors and creating lots of opportunity where upfront costs used to be to difficult to overcome for the individual, but also hedging opportunities and allocation ideas for institutions.

Next week, TFS Derivatives Corp., a leading broker of US housing derivatives, will be hosting seminars in San Francisco and Los Angeles.  The target audience for the seminars are investors, real estate brokers, financial consultants and asset managers.  The seminars are small (maximum 15 attendees) and discuss what is trading in the real estate derivatives and how to get access to these markets.  TFS hosts a successful seminar program series for real estate derivatives in the US and Europe.

Seminar topics include: Real Estate Returns Risk, Commercial Real Estate Total Return Swaps, Housing Futures and Forwards, Derivatives Contracts and Markets.

Please visit the Seminars section of the blog to get date, address and RSVP details.

All opinions expressed herein are those of the author, and no statement should be as an offer to buy or sell any futures contract, or security or option or other derivative instrument. Trading of all such futures, securities, options and other derivative instruments entails significant risk which can result in substantial financial loss. Such risks should be fully understood prior to trading.  Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment advisor before making any investment decisions..

housing derivatives housing futures hedging case-shiller index radar logic futures forward cme jonathan miller