Hello folks,
I figured I would start a new thread for this topic, since I'm sure many people here are curious about how either individuals, funds, banks etc. can end up in over-leveraged scenarios where they are trading 5x, 10x or even 15x their portfolio size in positions.
You might have heard about over-leveraging either from back in the 2008 credit crisis, or recently in the following CNBC interview (
), or on these WSB threads (Portfolio Margin is 10x worse than /u/1R0NYMAN's box spread trick : wallstreetbets, I failed my portfolio margin call. Final damage before TDA liquidated my account. : wallstreetbets, or the famous Robinhood story).
I'm really curious if folks here are familiar with the techniques that various hedge-funds end up in a over-leveraged scenario (preferably with references to other resources to learn about the topic), and how these types of massive leverage scenarios can go un-detected in the risk & controls departments at multi-billion dollar hedge-funds.
I figured I would start a new thread for this topic, since I'm sure many people here are curious about how either individuals, funds, banks etc. can end up in over-leveraged scenarios where they are trading 5x, 10x or even 15x their portfolio size in positions.
You might have heard about over-leveraging either from back in the 2008 credit crisis, or recently in the following CNBC interview (
I'm really curious if folks here are familiar with the techniques that various hedge-funds end up in a over-leveraged scenario (preferably with references to other resources to learn about the topic), and how these types of massive leverage scenarios can go un-detected in the risk & controls departments at multi-billion dollar hedge-funds.