Comments on Maison Fleury: The Greek CDS tragedy

oh and of course you do not touch the naked CDS qu...

2011-11-14T03:13:14.057-08:00

oh and of course you do not touch the naked CDS question, because there is nothing to say really.

but that is my point that CDS+Bond == Risk free ra...

2011-11-14T02:48:39.790-08:00

but that is my point that CDS+Bond == Risk free rate. And since risk free rate == 0, the yield of the bond is the cost of the CDS.

I am not sure what you mean by "CDS was zero initial cost". Perhaps you mean to the issuer in the sense that he needed no collateral (hence your 'in the beginning?). To the buyer there is a cost. I know, I make my living selling puts :)

Sorry but YOU have no idea what you are talking about and when you make such confused points about the basics of an instrument you would do well to not run around like a fool like that.

You have no idea what you are talking about when i...

2011-11-14T02:17:45.737-08:00

You have no idea what you are talking about when it comes to CDS.

How can the price of a CDS be the yield of a bond. The CDS is (or was) zero initial cost. There is no funding. The spread must be the yield of the bond minus the risk-free rate. And even that is not exactly true if the bond is trading away from par.