the long must buy at expiry price. the short must sell at that price so the delivery of the good is from short to long (joey you’re right) but if the long didn’t default (which he didn’t) he may give (deliver) 375000 worth of stocks of the s&p 500 and the contract can be settled. (i.e if the long is hedged, he may have some stocks to offer…) B is the best course of action on paper… I’m just trying to point out that C is also possible and more probable when you trade.
JoeyDVivre is the fixed income and derivatives champ on AF … I take his answer and that is B
jo_l Wrote: ------------------------------------------------------- > the long must buy at expiry price. the short must > sell at that price so the delivery of the good is > from short to long (joey you’re right) > > but if the long didn’t default (which he didn’t) > he may give (deliver) 375000 worth of stocks of > the s&p 500 and the contract can be settled. (i.e > if the long is hedged, he may have some stocks to > offer…) > Nope - The short delivers if there is any delivery to be done. I promise. > B is the best course of action on paper… I’m > just trying to point out that C is also possible > and more probable when you trade.
The way I understand this is that the short in this arrangement has promised to buy the S&P at $375k, so he has to take delivery…I’m basically thinking of this like calls and puts, which I think it is… are you reading it diffrently JDV?