« Gentlemen Prefer Film | Main | Secular Decline in the Movie Business »

Latest Stories

• Excel Wankers and Recession Averages
• Sorry, New York is Closed. Check Back Later.
• Catching Falling 2009 Earnings Estimate Knife
• Survivorship Bias in Global Markets
• Talking Positions on a Lazy-ish Retirement Portfolio

April 10, 2006

HedgeStreet Funding

I meant to mention this sooner, but HedgeStreet just landed $12.5mm in venture financing from Norwest. That comes on top of $12.4mm the online "binary option" exchange had already received.

It's a fascinating idea, one certain to appeal to sophisticated investors, while giving regulators giant headaches:

HedgeStreet's Binary Option Hedgelet is an all-or-nothing option with a fixed payout of either $10 or $0, depending on the final value of the underlying asset (for example, oil) or event (for example, rise in the Fed Funds interest rate). It consist of one contract that can be either bought or sold short, allowing traders to profit from short-term fluctuations in market movements and economic events. Each contract is defined by the price of the underlying asset, the strike price agreed upon by the buyer and seller, the expiration date of the contract and the payoff. For example, traders would BUY if they believe the market price for crude oil will rise or a specific economic event will occur. Traders would SELL if they believe the opposite will happen. If their insight is correct at the expiration date, they make $10. For more sophisticated traders, HedgeStreet also offers Futures Hedgelets, stop-loss futures with a variable pay-out between $0 - $50, depending on incremental movements in the underlying asset.

Sphere It   |   Digg it   |   Bookmark it   |   Stumble it   |   Facebook it

Comments