Hedging Quotes

Obviously, we are never going to be satisfied with a losing quarter but quite frankly we remain upbeat. The loss itself was a result of a $270,000 increase in allowance for doubtful accounts receivable and an unrealized hedging loss -- marked -- to market at the end of the quarter. As of August 31, 2005 the majority of this unrealized loss has been reversed out. However, the coffee market continues to remain extremely volatile. Beyond these two one time events, the quarter was overall a positive considering prices declined by over 20% in roughly a 30 day period.

So, in a way I was hedging and saying that if the Olympic stuff doesn`t work out at least I can be a lawyer.

We concluded that you cannot rely on delta hedging alone. It sounds simplistic to say that now, but back then, this was the sort of thing people were only just beginning to realize.

Briefly speaking, our conclusion is that stochastic volatility does not make a huge difference as far as the pricing is concerned if you get the average volatility right. It makes a big difference as far as hedging is concerned.

I wouldn`t call it hedging bets. I thought it was giving a jury the opportunity to decide the correct crime to convict a defendant for.