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http://www.marketwatch.com/news/stor...D&siteid=yhoof
UYG in response jumped from a 3.29 close to 3.62 at end of after hours trading. 19% delta in 1 day!
Maybe my UYG net at 3.03 wasn't too early after all
The Obama administration is close to deciding on a plan to purchase non-performing and illiquid assets from banks and the proposal could be announced early next week, CNBC reported late Tuesday, citing unidentified industry sources.
The so-called "bad bank" plan, would address the key problem of how to price the assets by using a model-pricing mechanism, CNBC said.
The model would take into account the government's ability to hold the assets, even to maturity, and pay for them with cheap funding. That could mean the government pays more than current market prices for the securities, CNBC explained.
However, if the government ends up paying less than the value at which the assets are carried on banks' books, the banks would issue common equity to the government, CNBC reported.
The so-called "bad bank" plan, would address the key problem of how to price the assets by using a model-pricing mechanism, CNBC said.
The model would take into account the government's ability to hold the assets, even to maturity, and pay for them with cheap funding. That could mean the government pays more than current market prices for the securities, CNBC explained.
However, if the government ends up paying less than the value at which the assets are carried on banks' books, the banks would issue common equity to the government, CNBC reported.
Maybe my UYG net at 3.03 wasn't too early after all
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