The Greatest Trade Ever
Bill Ackman was terrified about what would happen to the markets in February 2020 so he placed a bet against 64. 7 B of investment grade bonds. This bet was through credit default swaps (CDS). CDS essentially allow a buyer to buy insurance in case a bond defaults. However, sometimes traders buy this insurance without owning the underlying bond. This is what Michael Burry did in his famous 2007 big short manoeuvre. Ackman pulled off a similar big short, which we call Big Short, 2. Despite the funny sounding name, this trade took only about 1 month to payoff 2. 6 B. Burrys trade took several years so it could have cost his fund a lot of money if the bet didnt eventually go his way. So which trade do you think was better Excel sheet is here: Patreon:
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