Equity derivatives: Banks look beyond losses

NOBODY DISPUTES HOW challenging 2008 was for all equity market participants other than outright short-sellers. As Deutsche Bank analysts reflected in the firm’s 2009 volatility outlook: “2008 proved to be a year to which Murphy’s Law applied as (almost) everything that could go wrong did. In 12 months, equity markets across the globe experienced levels of volatility which rapidly ran out of comparisons. Market liquidity dried up amid hedge fund redemptions and extreme volatility brought new challenges for even passive investors.