straight from the text: “In a reciever option the buyer has the right to sell a CDS (go long the underlying) at some future date. An investor with a bearish outlook would buy a reciever option in anticipation of tightening credit spreads.” HUH? If things are bearish, then companies are going to default on their loans and you would not want be the seller of a CDS (buyer of a receiver option/going long the underlying). Credit spreads would seemingly NOT tighten as people would perceive the market as more risky. Does that make sense?
Looks like an error to me…
holy crap i just checked schwesers website and it is and error! (i would never have guessed that, assuming that I was obviously wrong) -damn Joey you study a lot!
nah - I just sit here at my computer a lot and when interesting things come up I answer them.