Links for 2008-10-13

  • MarketBeat | Rising Options Prices Could Be Propelling Stock Swings – “While options might be prohibitively expensive to use as a hedge, experts like Mr. Schwartz say some investors might be able to use those high prices to their advantage. If investors are tempted by cheap prices in the stock market and have started to consider buying, for example, they could purchase stock and sell puts to offset the cost”;
  • Governments should buy straight preferred stock in their banks | vox – “Common stock dividends should be set to zero for all banks receiving assistance for the duration of their use of the preferred shares. Banks receiving assistance should have to devise and defend a capital plan (for raising common stock), and must grant veto authority over major corporate decisions (e.g., mergers and acquisitions) to the government (to prevent asset substitution risk)”;
  • Rescue Plan Comes Around to Views of the Academics | – “A final step toward stabilizing the economy would be a large economic stimulus plan, said Berkeley economist Brad DeLong. He suggests that in the U.S. this could be two-tiered, with half the stimulus going toward a tax rebate and the other half dedicated to infrastructure spending”;