Mises Wire

Hedge your Home

Hedge your Home
It will soon be possible to purchase securities that sound somewhat analagous to futures and options for the residential housing market. Some questions arise: will the counter-parties in the trade hedge their own positions by going long or short in the residential housing markets? If so how can they buy or sell to compensate for movements in and out of their positions? How could they “short” residential housing to offset the risk of writing a put? Or will these markets consist entirely of speculators making unhedged one-way bets? For those of us who think that there is a housing bubble, this sounds like a great way to speculate on the inevitable bust.
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