Money-mouth intermediary needed
A decade or so ago, I wrote some modestly successful papers about the design of lotteries and the rationality or otherwise of buying lottery tickets. Having come to the conclusion that buying lottery tickets was (or at least could be) rational, it struck me that, apart from raffles and the odd birthday present, I’d never actually had a ticket in a proper lottery. So I went down to the newsagent on the assumption that I could hand over my money and get a chance at untold wealth. Instead I was confronted with a bizarrely complex lotto form (this was before scratchies, I think). I looked at it and decided it was too much trouble, and I would try to make my fortune the old-fashioned way.
Now I’m in a similar position. I’ve told the world the long-term US interest rate has to rise and, correspondingly, the price of US Treasury notes has to fall. Given that I don’t know when this will happen, I’m not willing to risk the unbounded losses of a short position. But I’d at least be willing to consider a modest flutter in put options, if the transactions costs weren’t too high and the settlement date were far enough in the future. However, although I’ve written plenty of papers about the properties of derivatives, the risks they pose to the world financial system and so on, I don’t know where or how to buy them, or what the costs are. The Sydney Futures Exchange seems to consider them too exotic. Any suggestions on easy ways to join George Soros and Warren Buffett will be greateful appreciated.
fn1. That is, as all Australian readers will know without being told, through real estate speculation.