Comments on: Build Your Own Principal Protected Notes

By: Preet

Preet — Thu, 05 May 2011 02:46:52 +0000

Hi Chris – I’m happy to stand corrected – could you provide your numbers for your example? If you can source spreads at various times (i.e. not cherry pick), I’d love to add it and your comments to the original post.

By: chris

chris — Wed, 04 May 2011 21:58:55 +0000

Wow…i’m laughing out loud this is so dumb, Preet, you either know what you wrote is ridiculous or you just have no real clue what you are talking about. honestly, i’m not trying to be a d*ck….i just know much more than you. what you wrote would never work in practice…ever.

Leaps on the TSX60 on the MX are ridiculously illiquid. the bid ask spread will kill any profit you have. clearly you haven’t check yourslef.

longer term derivative exposure (8 years) is delta hedged to non publicly available instruments. you won’t be able to do that either.

You can not build your own PPNs. trust me. why don’t you advise that everyone invest in a bloomberg terminal for 3000/month Preet? maybe then we can all hedge our own derivative risk as well.

By: Can a product deliver both safety and high yields? | Stock Market News

Can a product deliver both safety and high yields? | Stock Market News — Wed, 11 Aug 2010 05:50:28 +0000

[...] the DIY crowd, Preet previously outlined how to create you own principal protected note. Please feel free to share if you have other principal protection [...]

By: Can a product deliver both safety and high yields?

Can a product deliver both safety and high yields? — Tue, 10 Aug 2010 09:00:21 +0000

[...] the DIY crowd, Preet previously outlined how to create you own principal protected note. Please feel free to share if you have other principal protection [...]

By: Thicken My Wallet » Blog Archive » Can a product deliver both safety and high yields?

Tue, 03 Aug 2010 08:42:05 +0000

[...] the DIY crowd, Preet previously outlined how to create you own principal protected note. Please feel free to share if you have other principal protection [...]

By: Book Review: Stop Working too: You Still Can! « Daily News

Book Review: Stop Working too: You Still Can! « Daily News — Wed, 09 Dec 2009 23:32:16 +0000

[...] Derek spends a chapter explaining how to roll your own, which has been covered elsewhere a number of times, but is useful for anyone who feels drawn to this investment vehicle. He presents three [...]

By: Preet

Preet — Wed, 06 Feb 2008 21:51:04 +0000

Hi Eric – I’m not sure how they actually construct the notes themselves, but I don’t believe they use LEAPS or regular call options. I think that they may actually underwrite the risk themselves and make money on most notes and perhaps lose money on some. Perhaps the fees serve as the insurance premiums? If there are any financial engineers out there that would like to comment, please feel to do so (and you can do it anonymously if you like).

By: Eric

Eric — Wed, 06 Feb 2008 20:17:36 +0000

Great post. I noticed that the National Bank of Canada is offering an 8 year PPN linked to an index of 20 very specific stocks. Unless they buy back the PPN, they commit to a return equal to the return of that index. How do they do it with LEAPS...Are they rolling over the LEAPs to make it through 8 years.

What if the index does not go up high enough to cover the cost of the LEAPS...How do they deliver a marginal index return in that case..? Do you think they use their own mortage business to protect the note, instead of a CoG strip bond.

Many questions, I know.. Thanks