Interesting currency vehicle

[brewer12345]

Barron's mentioned something I missed: AAB.WS (AAB-WT to Yahoo Finance). These are warrants (think call option) that expire in Feb 2008 and pay off if the market value of an equally weighted basket of yen, yuan, singapore dollars and taiwan dollars is above a set rate (roughly at current market levels). Since Barron's mentioned it, it will be overpriced for a week or two as the idiot followers of that magazine jump on it, but it might be something to file away for later if you need to hedge against a rise in Asian currencies vs. the USD or you wish to speculate on the same. I'd also suggest reading the prospectus before you even think about buying this thing.

 

[astromeria]

How about starting The Brewer Fund, a collection of your favorite hedging investments (EM bonds, little-known SCV co's, shipping co's, currency plays) wrapped in a small mgt fee--like a cheaper, better Hussman fund. I'm sure it woud be a big hit. Even though you're way over my head, count me in for a small position

 

[brewer12345]

Yeah, but then I'd have to market it.

 

[astromeria]

2,000 people read this board, that's a good start <eek! and to think of all the drivel I've posted...>

 

[Nords]

2,000 people read this board, that's a good start <eek! and to think of all the drivel I've posted...>

... and read...

 

[uncledrz]

Brewer
I like the idea of exposure to non USD currency/assets. On the currency side, futures/options are a little to risky for us, would rather go with FAX or GIM, unhedged, or a hard currency mutual fund.

Interest idea, tho.
Uncledrz

 

[brewer12345]

Brewer
I like the idea of exposure to non USD currency/assets.  On the currency side, futures/options are a little to risky for us, would rather go with FAX or GIM, unhedged, or a hard currency mutual fund.

Interest idea, tho.
Uncledrz

I own GIM and I think it adds some nice diversification. The interest in AAB is that you can get exposure to a lot of notional currency value by putting up a relatvely modest amount of money. That makes it ideal for hedging and for games like: Sell $50k of GIM if it gets to a 5% premium to nav and put $5k into AAB and $45k into the USD bonds/bond fund/MM/etc. of your choice. You still get some exposure to non-USD currencies, but you can potentially free up some cash if you wish to do so. Of course, since AAB turns into a pumpkin in Feb 2008, it would be wise to understand whatyou are buying.

 

[shiny]

I'm looking for a way to buy some yuan and this does seem to offer a broader investment. I've been watching it since this thread started a couple of months ago, and just to show my naivete - I have a question that hopefully someone (brewer!) will answer - do I have to be approved to trade options to buy into this?

 

[brewer12345]

At Schwab you do have to be approved for options. Don't know about other brokers.

I think China is pretty picky about who holds Yuan, so it might be tough to buy some directly.

 

[dmpi]

At Schwab you do have to be approved for options. Don't know about other brokers.

At one time (~18 years ago) my schwab account was approved for options. A few months ago I checked again and now it's not. I wonder if you have to renew this or something.

 

[haha]

I have a question that hopefully someone (brewer!) will answer - do I have to be approved to trade options to buy into this?

This isn't an option, it is a warrant. Though functionally this one is very similar to an option. Warrants have been around very long time. I traded warrants before the CBOE existed.

Ask your broker, but very likely if all you want to do is buy them, you are good to go. To sell them short, you would need a margin account.

Low level option clearance is very simple, maybe you want to go ahead and get it added to your accounts. To buy or sell puts calls or straddles or write covered calls is straightforward. At Fidelity you fill out an online form and are approved within one day.

Ha

 

[shiny]

Thanks guys, I'll check with Schwab.

 

[FinanceDude]

Yeah, but then I'd have to market it.

I can help with that..........

 

[shiny]

I case anyone is interested:

Everbank now has a World Currency Account for the Yuan. Minimum 10k, no interest paid, just a pure currency speculation vehicle. Also, you have to put the $ in in dollars and take it out as dollars unlike their other currency accounts. It has no maturity date, so you are not forced to sell them on a specific date like with the CDs.

 

[brewer12345]

I case anyone is interested:

Everbank now has a World Currency Account for the Yuan. Minimum 10k, no interest paid, just a pure currency speculation vehicle. Also, you have to put the $ in in dollars and take it out as dollars unlike their other currency accounts. It has no maturity date, so you are not forced to sell them on a specific date like with the CDs.

Neat. Looks like they also will let you ivest in gold and silver, either directly or in a pool.