What is the convention regarding mtm for collateral
Posted: Fri Sep 14, 2012 12:29 am
I did not mean margin call. I supposed hypothetical plain vanilla in which at expiration seller of the option default for delivering underlying security for strike price. I do not know whether it is real case or not.
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Right, so if you haven't thought about this being a feasible case or not, why are you talking about it? Generally speaking, under what circumstances is this delivery problem possible with the assumption that there's no failed margin calls on the option?
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Dear Martinghoul
can I think from your massage that you do not know any case with plain vanilla option default or you tried to develop my statement that
I do not know a fact of such default though one can easy assume that option defaults event is theoretically feasible. You know there are a lot situations that theory predictions even unobservable at the time can be realized in a future. If we talk on theoretical level the arguments should be formal that something is wrong because ...
If I talk about classic option to talk about margin calls is irrelevant.
If you wish to say that it is wrong think that European option can not be collateralized, say it. It will be clear that we at least talk about the same problem
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Right, so if you haven't thought about this being a feasible case or not, why are you talking about it? Generally speaking, under what circumstances is this delivery problem possible with the assumption that there's no failed margin calls on the option?
-----------------------------------------------------------------------------
Dear Martinghoul
can I think from your massage that you do not know any case with plain vanilla option default or you tried to develop my statement that
I do not know a fact of such default though one can easy assume that option defaults event is theoretically feasible. You know there are a lot situations that theory predictions even unobservable at the time can be realized in a future. If we talk on theoretical level the arguments should be formal that something is wrong because ...
If I talk about classic option to talk about margin calls is irrelevant.
If you wish to say that it is wrong think that European option can not be collateralized, say it. It will be clear that we at least talk about the same problem