Discussion in 'Trading' started by Warrior4g, Jan 16, 2008.
i hear about hedge funds shorting CDO's, how is that actually done?
Through a broker most probably, like everyone else. A Hedge Fund is nothing more than an entity (Partnership, Corporate, Trust, etc) managing a pool of money. This "entity", like anyone else (you and I are also entities, i.e. "individuals"), has to have a bank account for trading and have to trade through brokers (most of the time).
Unless you are asking for something else, I hope this helps.
I imagine they are shorting the ABX via bond desks.
One way would be to buy protection (credit default swaps) against the CDO.
Here is a primer on a typical transaction.
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